Tax Revenue Implications of Decarbonising Road Transport
Scenarios for Slovenia
This report investigates how tax revenue from transport fuels could evolve over time
as vehicles rely less on fossil fuels, with a focus on the case study of the Republic
of Slovenia. Reducing the reliance on fossil fuels in the transport sector is a welcome
development from the perspective of its climate and health impacts and of reduced
energy dependence. However, under current settings, reduced fuel use will also lead
to a loss of tax revenues, which may put stress on government budgets. Based on simulations
for Slovenia, with a 2050 horizon, the report provides an in-depth assessment of the
taxation of road transport and investigates how tax policy could adapt to declining
fossil fuel use in the long term if the objective is to maintain revenues at current
levels while taking fairness and efficiency considerations into account. It finds
that gradual tax reforms, with an evolving mix of taxes, shifting from taxes on fuel
to taxes on distances driven, can contribute to more sustainable tax policy over the
long term.
Under current policies, tax revenue from diesel and gasoline use in private cars is likely to decline substantially in the coming decades Tax revenue from passenger cars and trucks for the baseline scenario, 2017-2050
A relatively modest kilometre charge that gradually increases over time may cover the revenue loss from fuel taxes on private carsstrong Kilometre tax equivalent to cover revenue loss from fuel and carbon taxes on private cars, 2020-2050