Investigating Australian households' vehicle ownership and its relationship with emission tax policy options

There is an equity question around the distributional impact of an emission tax policy in Australia. For households that cannot afford to live in the inner city, their housing options are limited to suburban areas where public transport may not be available. Travelling with their vehicles is crucial for commuting, shopping and other daily activities for these households and being taxed on their emissions means they are more financially vulnerable than households with access to good public transport. In addition, certain household such as those with children may need larger vehicles, and hence may also face a higher emission tax. This study aims to analyse the equity of emission tax policies by looking at its possible impact on different households. This study uses a combined spatial microsimulation and imputation approach to distribute various vehicles to different households and analyse their usage. The results show the dilemma in implementing an emission reduction scheme. Taxing the use of vehicles may impact lower income households the most as they will lose a higher proportion of their income. This is intensified by targeting the more inefficient vehicles, especially older vehicles. Results suggest incentives or concessions could be used to reduce this impact.