30 - Updating Parry (Source: NY Times, 6/29/08) British...

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Updating Parry (Source: NY Times, 6/29/08)
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British Government Defended High Gasoline Taxes on Three Main Grounds. (Parry and Small, American Economic Review , 2005) 1. By penalizing gasoline consumption, reduce both emissions of carbon dioxide and local air pollution. (this is what I refer to as environmental damages) 2. Raise cost of driving and therefore directly reduce congestion and traffic related accidents. 3. Provide government revenue. Gasoline taxes provide equivalent of ¼ personal income taxes in UK. (and do so efficiently since fuel has a relatively low price elasticity) Double dividend
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External Costs Used in Parry and Small 234 176 Best Estimate in ¢/ gal. 48 2.4 [0.96-6.0] 60 3.0 [1.2-7.5] External Accident Costs, ¢/mile 134 101 Adjusted for various factors 140 7.0 [3-15] 70 3.5 [1.5-9.0] External congestion, ¢/mile 6 6 [0.2-24] 6 6 [0.2-24] Carbon Dioxide, @ $25/ton CO 2 , ¢/gal. 40 2.0 [0.4-10] 40 2.0 [0.4-10] Local air pollution, ¢/mile U.K. Best Estimate in cents/gal. U.K.
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30 - Updating Parry (Source: NY Times, 6/29/08) British...

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