The Open UniversitySkip to content

Purchase, circulation and fuel taxation

Potter, Stephen (2008). Purchase, circulation and fuel taxation. In: Ison, Stephen and Rye, Tom eds. The Implementation and Effectiveness of Transport Demand Management measures: An International Perspective. UK: Ashgate, pp. 13–27.

Full text available as:
PDF (Not Set) - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Download (298kB)
Google Scholar: Look up in Google Scholar


During the last decade, the UK and many other developed nations have reformed existing forms of road transport taxation to address a number of transport policy goals. This has involved modifying the design of purchase, circulation and fuel taxation to promote:
• More fuel efficient vehicles
• Alternative fuel vehicles
• Cleaner fuels (lower emissions and/or low carbon)
• Modal shift and traffic volume
• Congestion reduction
This chapter particularly explores the use of environmental taxation to promote Transport Demand Management (TDM) and identifies key principles of the design of such environmental taxes. It notes the importance of positioning a tax measure in relation to user decisions, its targeting and the threshold levels needed to provide a useful policy impact. Taxation measures considered include:
• Initial vehicle purchase
• ‘Circulation’ Tax on the ownership of vehicles
• Tax on the use of vehicles
It is concluded that purchase, circulation and fuel taxation can promote a variety of transport and environmental policy goals. It is important to distinguish between taxation measures to influence vehicle characteristics (technology, the type of fuel used and fuel economy) as opposed to the level vehicle use (TDM). Well designed purchase and circulation taxes can stimulate cleaner car technologies and fuels, but they are not an appropriate TDM measure.

Road fuel duties are an effective general TDM measure but cannot be targeted on particular areas, times or for particular urban transport policy purposes. Road user charges can be targeted on such factors, and consequently, led by the established example of Singapore, followed by Norway and London, they are attracting much attention. The road transport taxation landscape is possibly set to change with many countries now seeing road user charges as potentially replacing the entire regime of transport taxation on purchase, ownership and fuel. But, rather than replacing fuel duties, evidence is mounting that to manage transport demand, road user charges need to be in addition to and not replace fuel and vehicle taxation. This may be a politically inconvenient truth, and the real challenge will be managing the transition towards an effective new transport taxation regime.

Item Type: Book Section
ISBN: 0-7546-4953-9, 978-0-7546-4953-3
Academic Unit/School: Faculty of Science, Technology, Engineering and Mathematics (STEM) > Engineering and Innovation
Faculty of Science, Technology, Engineering and Mathematics (STEM)
Item ID: 12861
Depositing User: Users 8128 not found.
Date Deposited: 20 Jan 2009 06:53
Last Modified: 11 Jun 2020 20:43
Share this page:

Download history for this item

These details should be considered as only a guide to the number of downloads performed manually. Algorithmic methods have been applied in an attempt to remove automated downloads from the displayed statistics but no guarantee can be made as to the accuracy of the figures.

Actions (login may be required)

Policies | Disclaimer

© The Open University   contact the OU