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International fuel tax assessment: an application to Chile

Published online by Cambridge University Press:  31 January 2012

Ian Parry
Fiscal Affairs Department, International Monetary Fund, 700 19th Street NW, Washington, DC 20431, USA. Email:
Jon Strand
World Bank, Washington, DC, USA. Email:


Gasoline and diesel fuel are heavily taxed in many developed and some emerging and developing countries. Outside the United States and Europe, however, there has been little attempt to quantify the external costs of vehicle use, so policy makers lack guidance on whether prevailing tax rates are economically efficient. This paper develops a general approach for estimating motor vehicle externalities, and hence corrective taxes on gasoline and diesel, based on pooling local data with extrapolations from US evidence. The analysis is illustrated for the case of Chile, although it could be applied to other countries.

Research Article
Copyright © Cambridge University Press 2012

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