Taxation: Evaluation and efficiency of the automotive tax system
Context
Efficiency and evolution of the meccano of fiscal and regulatory incentives for automobiles
In Europe, and a fortiori in France, the transition of the transport sector is at a pivotal stage between a start-up phase and a phase of massive deployment:
- The European regulatory framework has been defined, and the end of sales of ICE vehicles has been definitively established.
- Certain solutions, with proven environmental benefits, have demonstrated their economic advantage and are capable of achieving mass deployment.
- The levers to be mobilized have been fully identified, and are based on a combination of technology and behavior: electrification, longer vehicle life, circular economy, demand reduction, intensification of use, and so on.
Nevertheless, the challenge of this change requires new tools and methods to ensure an accessible and acceptable transition. France’s road tax system is one of the key issues at stake. On one hand, because it accounts for a significant proportion of the national budget, and on the other because it is largely based on the consumption of fossil fuels, which are set to disappear.
Description
This program takes stock of the French automotive tax / incentive system through a mapping of financial flows based on a study of 22 fiscal mechanisms linked to road transport. It questions its transformational relevance from an environmental point of view and its equity, applying a sociological approach by user category.
The study presents a trend projection of the balance sheet for expenditure and tax revenues linked to road mobility in 2025, 2030 and 2035. This balance sheet is based on input data from the Vehicle Registration System of the French Ministry of the Interior, coupled with our own database, which simulates changes in the fleet, consumption and mileage of all vehicles on the road.
Based on an analysis of this reference trend-based scenario, which incorporates the current regulatory framework as well as conservative assumptions for behavioral and technological developments, the Mobility in Transition Institute has demonstrated the need for a comprehensive and ambitious overhaul of road taxation to maintain the State’s balance budget, while planning an exit from dependence on fossil fuels.
The database created is a valuable tool for the ex-ante evaluation of proposals for tax changes. As part of this program, the Mobility in Transition Institute makes recommendations for simplified, transformational and more equitable mechanisms. These recommendations are based on the following guidelines :
- A simpler breakdown of taxation into three categories: purchase, use and ownership
- The introduction of levers relating to vehicle energy efficiency
- The introduction of evolutionary schemes that converge towards a tax system representative of total emissions in life-cycle analysis of road vehicles
- A rebalancing of part of the fuel tax towards an annual tax on vehicle ownership through a return to the vignette automobile.
The aim is to use this new tool to demonstrate the feasibility of a global, transversal approach, consistent with the needs of the transition, which will allow us to anticipate obstacles to achieving the objectives of the National Low Carbon Strategy. The purpose of this work is to open the dialogue on a fundamental area of public policy that must be included in the ecological planning agenda.
Team
