Is financial policy measurements socio-economic profitable?

Purpose and goal

In this project we intend to explore how to deal with the marginal cost of public funds in the socio-economic analysis of economic policy measures. The question is most relevant to economic policy measures, it is quite crucial in determining if you (socio-economically speaking) should prioritize availability or climate. It also has importance for the socio-economically optimal rate of different instruments (only in a society where the state does not need to bring in fiscal taxes, is the optimal fee equal to the external marginal cost). It also has significance for infrastructure investments profitability, but here it is mainly a level shift, since all investments are affected quite similar (it is however important in the analysis of different forms of financing).

Results and expected effects

The study concludes with recommendations on how the marginal cost of public funds and the tax effect should be handled in the cost benefit analysis. We also provide recommendations on how the optimal price should be affected if one takes into account the marginal cost of public funds and tax base effect. Should one raise or lower the fuel tax or the congestion charges? Since this project is not aimed at direct implementation, we can not define the monitoring indicators in terms of kilograms emissions or the like. We propose instead the following monitoring indicators: - Has the project had impact on the international scientific debate in the field? - Has the project had impact on the national scientific discussion in the field (mainly ´ASEK´)? - Has the project affected the Swedish debate on economic instruments?

Approach and implementation

The first step is a literature review on the size of the tax base effect and on how the marginal cost of public funds should be applied in the calculations. The second step is to test skattebaseffektens size empirically. This is done in three ways: 1. In the first study we test the skattebaseffektens size of kilometerskatt and diesel tax. Observations are made by a factor demand model. The model is originally developed for the analysis of the impact of an allowance market for CO2. In connection with the project, climate, transport and regions included in the transport model. An output from the model are changes in production, ie, in the tax base. 2.In the second study, we test the tax base sanitivity to changes in the gasoline tax. This is done with the Samlok model. 3.I the third study we test the tax base effects size in the introduction and amendment of congestion charges. This is also done with Samlok. Unlike the study of fuel tax, we must also calculate the effects on income distribution since congestion charges might decrease travel costs for people with high incomes. Since kilometer tax and fuel tax will not affect congestion, one can ignore this effect there.