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Thoughts on an Automotive Carbon Tax

Thanks to Greg Wright for sending in a very thoughtful piece on basing California’s Vehicle License Fee (VLF) half on the CO2 emissions and half on the car’s market value.

The contentious but needed Vehicle License Fee can be rejiggered to serve the important purpose of environmental protection by basing it, not only on the value of vehicles, but on their carbon dioxide emissions as represented by each model’s average miles per gallon in each model year. The less-efficient vehicles that get fewer miles per gallon—SUVs, large pickup trucks, Hummers—emit more CO2 for each mile travelled, and should be assessed a higher vehicle license fee, inversely to their miles per gallon; the more efficient vehicles that get higher MPG should pay accordingly smaller vehicle fees.

A half-MPG-based Vehicle License Fee will reward car-owners who choose to drive less-polluting vehicles; prospective car buyers will be encouraged to do likewise when they consider their next auto purchases. And it should motivate, or at least nudge, the car industry to more rapidly develop and market much more efficient, and therefore cleaner, vehicles.

He also included a link to an interesting piece from a fleet newsletter in the UK that discusses the then-new CO2-based tax system.

These changes are all about one thing: the environment. By rewarding clean cars and hitting gas-guzzling perk-drivers hard, the government is trying to make the company car market as eco-friendly as possible. But the message is a mixed one - although high-emission vehicles will be penalized heavily, drivers who increase the private mileage they do can still benefit, which was something the government was keen to reduce under the old engine-size system. Our advice to fleets is simple: take a close look at your situation and carefully consider your options. Remember that downsizing or going diesel makes the most sense.

A carbon tax on cars makes a great deal of sense (an earlier post touching on that is here). “Neither global warming nor California’s fiscal crisis have gone away, so all of this remains relevant potential policy-making.”


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