Transportation taxes increase national security

Environmental taxation has a wide range of regulatory influence directions. Thus, taxes on the emissions of polluting substances have a direct restrictive and compensatory effect, to a greater extent. At the same time, energy, transport taxes, packaging taxes, etc. can provide incentives for the transformation of the economy in the direction of increasing its environmental and energy efficiency while maintaining the pace of economic development. Summarizing the directions of the regulatory influence of environmental taxes allowed for singling out three target blocks, reflecting the results of their functioning. This forms a background of the hypothesis that the result of establishing environmental taxes is the national security for the country ().

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The system of environmental taxation has significant differences across the world, which does not always make it possible to compare the specifics of the same environmental taxes. In the structure of environmental taxes, it is transport taxes that have wide variability in their applications in different countries. Vehicle registration taxes, road taxes, car import duties, vehicle sales taxes, etc. successfully function in different countries. Previous research has shown that the most diverse in terms of the installation of functional elements are taxes for the registration and use of vehicles. Therefore, this group of taxes was chosen for the simulation.

To form the research sample, it is necessary to provide a description of the main features of the functioning of these taxes in different countries. An analysis of environmental taxation systems and direct transport taxes made it possible to form a research sample from nine countries (i.e., the Czech Republic, Finland, France, Ireland, Israel, Portugal, Romania, Slovakia and Turkey). The conducted analysis of the design of transport taxes in different countries of the world proved that in these countries, different criteria for the taxation of transport taxes are used, and there are also common features of transport taxation. This makes it possible to build an economic-mathematical model that will consider the specifics of taxation in several countries at the same time and, consequently, to obtain broader conclusions about the effectiveness of transport taxes in ensuring national security. A general description of these taxes is presented in .

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The Czech Republic has established a road tax, the purpose of which is to tax the registration or use of vehicles. Tax rates are set in Czech crowns per year per vehicle and are differentiated according to two criteria: for passenger vehicles, the tax rate depends on the volume of the engine cylinders, and for other vehicles, it depends on the number of axles and the total weight of the vehicle. A similar practice of establishing a transport tax is observed in Slovakia. In Ireland, the transport tax is set in fixed amounts calculated per year, and its amount depends on such criteria as the type of vehicle, its weight and the volume of carbon dioxide emissions generated during the operation of the vehicle. In addition, Ireland has also established a tax for the first registration of a vehicle, the rates of which are set at a percentage of the market value of the vehicle, differentiated by the categories of cars. It is important that the minimum amount of this tax is also determined for each category.

Portugal also has fixed vehicle tax rates that vary by car type. The criteria for setting tax rates are the category of the vehicle, the type of fuel used and the volume of the engine cylinders.

On the other hand, the tax for the first registration of vehicles operating in Finland is also set differently for the two categories of vehicles. For motorcycles and buses, the rate is set as a percentage of the value of the vehicle, whereas for minibuses and cars, it depend on the generated emissions of harmful substances. In addition to this, Finland also uses a transport tax, which is charged per 100 kg of vehicle weight for each day of use of such a vehicle. Moreover, the rates that will be charged to vehicles are differentiated depending on the type of vehicle and on the type of fuel used by the vehicle.

The practice of applying a transport tax in France is quite interesting. The annual amount of the tax is calculated differently depending on the total volume of carbon dioxide emissions generated by the car. At the same time, for each category of car, the tax consists of two parts: a basic fixed amount and an amount calculated by multiplying the rate by 1 g of carbon dioxide emissions per 1 km (for example, for cars generating CO2 emissions in the amount of 141–160 g per kilometre, the basic amount is 290 euros, and the settlement amount is 11.5 euros per 1 g of CO2). Moreover, it is important that vehicles that generate less than 50 g of carbon dioxide emissions per kilometre not be taxed.

The practice of applying the transport tax in Israel also attracts attention. Fixed rates are set in national currency per year and are differentiated according to two criteria, namely the cost of a new car and its age, while tax rates are progressive relative to the value of the car and regressive relative to its age. In Turkey, the basis for the application of fixed tax rates is also the type and age of the vehicle, as well as, for certain categories, the volume of the engine cylinders.

In Romania, the annual vehicle tax differs for the three categories of vehicles: buses and minibuses, cars with an engine cylinder volume of up to 2000 cm3, and cars with an engine cylinder volume of more than 2000 cm3. Moreover, the tax amount is calculated by multiplying the established rate for every 500 cm3.

Thus, it was found that 6 (the Czech Republic, Finland, Portugal, Romania, Slovakia and Turkey) out of the 9 studied countries establish tax on vehicles according to the vehicle’s type. At the same time, the Czech Republic, Slovakia and Finland consider the weight of vehicles when setting transport taxes. Among the studied countries, only Finland, France and Israel do not differentiate transport taxes depending on the power of the vehicle’s engine. It is important that in Portugal the criterion for establishing transport taxes is the type of fuel, and in Finland, France and Ireland it is the level of CO2 emitted into the atmosphere. Turkey and Israel tax vehicles based on their age, and the value of the vehicle was a criterion found only in Israel. It was found that different criteria (both the cost and physical characteristics of the car) are used for taxation. For example, in France, differentiated transport tax rates depending on the amount of CO2 emissions show that the criterion of stimulating the environmental safety of cars is also important for the government. On the other hand, the establishment of different taxes rates depending on the volume of the engine cylinder, as well as on its age, not only can have a fiscal purpose (collecting additional revenues from the more expensive cars) but also can regulate the use of the most environmentally harmful cars. In addition, it is also interesting to investigate whether transport taxes that are established according to the principle of the value of the car perform any regulatory function.

For further calculations, it is important to form the most homogeneous sample of transport environmental taxes. That is why, in the further study of the two taxes operating in Finland, we will choose only the transport tax, leaving out the tax for the first registration of vehicles, and we will also not consider the tax for the first registration of a vehicle while studying environmental taxation in Ireland.

Given the wide spectrum of influence of environmental taxes on various aspects of ecological development, energy efficiency and environmental consequences, it is advisable to choose a single measure of the resulting parameters. Research in the field of national security proves that its measurement involves the construction of integral indicators that characterize individual aspects of national security depending on the goals of the analysis [].

To characterize the indicator of national security, we will use an integral indicator that summarizes the parameters of environmental, energy and economic security that are sensitive to the impact of environmental taxation. The method of calculating the defined integral indicator is presented in detail in [,].

 presents the dynamics of the values of the calculated integral indicator for the studied sample of countries. As we can see, during the analysed period, the level of national security grew most dynamically in Finland, France, Portugal, Romania and Slovakia. The Czech Republic and Israel were characterized by moderate values of the indicator without sharp deviations during the year. On the other hand, it is important that the integral level of national security in Turkey has almost halved during the studied period. At the same time, it is important that during the studied period, the integral indicator of ecological, economic and energy security has a rather high level of volatility in almost all the studied countries. This indicates the fact that the latest trends in the development of national economies are characterized by significant transformations under the influence of political decisions, limited resources and the growth of public consciousness. However, given the heterogeneity of global development, it is of scientific interest to identify the reasons for such fluctuations in the levels of national security. This will allow for establishing vectors of the application of regulatory measures in countries across the world.

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This paper proposes to study the influence of the specifics of the choice of functional elements of environmental transport taxes on the national security of a country with the help of regression modelling tools using dummy variables characterizing a certain feature of transport taxation. The choice of an approach to modelling with dummy variables is determined by the need to formalize the parameters of transport taxes in different countries in order to enter into the model notations regarding their application in the panel data sample. This approach allows for comparing the effectiveness of transport taxes applications in the countries that used a certain criterion for transport taxation with the countries that ignored such a criterion. The general appearance of the model is in Equation (1):

𝑁𝑆𝐼=𝛽0+𝛽1𝐸𝑇𝑅+𝛽2𝐸𝑇𝑝+𝜀���=�0+�1���+�2���+�

(1)

where NSI is the resulting variable denoting the integral indicator of national security; ETR is a factor variable denoting the amount of revenue from the payment of the investigated environmental tax in the country; β1 is the coefficient that takes into account the influence of the factor variable amount of revenues from the environmental tax on the integral indicator of national security; ETp is a dummy variable denoting the use in the country of a certain criterion for determining the tax base for an environmental transport tax, which takes the value 1 if the criterion is used and 0 if it is not used; β2 is the coefficient that takes into account the effect of the dummy variable on the resulting characteristic; and ε is the measurement and specification errors.

The main factor variable is the total annual amount of revenue from the investigated transport tax in each country. To ensure the proportionality of the statistical sample of data, the indicators of tax revenues are measured in millions USD.

 shows the summary statistics of the revenues from the environmental tax for the registration/use of vehicles in the cross section of the studied countries.

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The criteria for the formation of dummy variables characterizing the tax base with environmental taxes for the registration/use of vehicles in a country are the selected parameters of the specificity of taxation, revealed during the preliminary analysis.  forms a matrix of dummy variables. The dummy variables measured as 1 characterize the application in the country of a certain criterion of environmental taxation, and those as 0 characterize its absence.

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Therefore, this paper proposes to model the influence of the specificity of the establishment of the functional parameters of environmental taxes on national security by using the panel regression toolkit, which allows for the simultaneous assessment of the effects in terms of the general sample of countries. A model specification with panel-adjusted standard errors based on the use of the Durbin–Watson test was chosen for the calculations. The choice of the model specification was determined by the peculiarities in the input statistical data. At the beginning of the study, an OLS regression was built; however, the model-adequacy criteria turned out to be unsatisfactory. Given the selection of panel data for the evaluation, it was assumed that the input data would be characterized by the heteroscedasticity of the residuals, which would not allow the use of classical linear models. The conducted White’s test confirmed the heteroskedasticity in the input data. To eliminate this problem, the contemporaneous correlation model, namely the panel-adjusted standard errors, was chosen. The testing of various modifications of this model revealed that the most adequate was the model based on the Durbin–Watson criterion. The assessment involved the construction of separate models using dummy variables that characterized the application of each of the criteria for determining the tax base. Calculations were made for the period 1996–2019. The choice of research period was informed by the availability of a complete data set of transport tax revenues and by indicators of national security factored into the model.

3. Results

The first of the built models describes the impact of accounting for the type of vehicle (car, truck, bus, etc.) for differentiating the rates of transport tax paid for registration or use of a vehicle. The results presented in the  demonstrate that the effect of the specified dummy variable is statistically significant; in countries where this criterion is factored in when setting a transport tax, the integral level of national security is on average 0.0375 higher than that in countries where this criterion is not used. This demonstrates the fact that the establishment of transport taxes by type of vehicle is effective in the context of ensuring national security.

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A common criterion next to the type of car is its weight, in terms of differentiating types of cars when setting tax rates. The results of calculations presented in  prove that using this criterion in a country has a positive and statistically significant effect on the growth of the integral level of national security—on average, its level for countries using this criterion is higher by 0.0272 compared with countries in which the specified the criterion is not used.

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In contrast to this, the results of calculations given in  prove that the use of the type of fuel used by a car as a functional criterion for establishing transport taxes was not a relevant factor in increasing the regulatory effectiveness of environmental taxes in ensuring national security.

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In addition, insufficient conditions for the effectiveness of environmental taxes also turned out to be the use of criteria of power and emissions from the car; this influence is statistically insignificant, as evidenced by the data in the  and .

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On the other hand, the establishment of environmental taxes depending on the value and age of the car is a factor that significantly reduces their effectiveness in the context of ensuring national security—in countries that use this criterion, national security is characterized by a significantly lower level compared with another countries ( and ).

4. Discussion

The obtained results made it possible to confirm the working hypothesis that the regulatory impact of environmental taxes depends not only on their presence in the country but also on the selected application criteria. At the same time, it is important that some of the built models turned out to be statistically insignificant, which indicates the presence of the influence of other factors on the resulting indicator of national security, which is stronger than the impact of several parameters of environmental taxation. At the same time, the presence of a generally positive impact of transport taxes, confirmed by many of the constructed models, indicates that their application is effective in order to balance environmental, economic and energy aspects of national security. Regarding the impact of individual functional parameters of transport taxes, three types of it were identified: strengthening the general impact of transport taxes on national security, the deterioration of the efficiency of transport taxes and an uncertain impact that requires further research.

Calculations of transport taxes impact on the structure of sales of vehicles, grouped by the level of impact on the surrounding natural environment, can become promising areas of research into the effectiveness of transport taxes in the context of ensuring national security. The study conducted on a selected sample of countries contains results that can also be used in benchmarking for other countries. At the same time, it is important that the developed approach can also be applied to other types of environmental taxes, given the specifics of their applications, in terms of being both objects and subjects of application. The proposed methodology can be adapted to predict the expected consequences of the implementation of environmental tax reforms, depending on their chosen design.

5. Conclusions

The developed scientific-methodical approach and the calculations based on it proved that the choice of functional criteria for setting environmental taxes was important in the context of comprehensively providing environmental, economic and energy security. It is more rational to choose the type and weight of the car as criteria for differentiating tax rates. Criteria such as the emissions generated by the vehicle, its power and the type of fuel used were conditionally neutral, as they did not provide a relevant impact on national security. It was important that the criteria of the value and age of the car, which are used in the establishment of transport taxation in several countries, demonstrated inefficiency from the point of view of the regulatory impact of ensuring national security, which can instead be achieved by the action of environmental taxes.

The obtained results have significant practical value for the governments of countries that are formulating the policy of transport taxation or are in search of environmental tax reform. For example, in order to increase the comprehensive effectiveness of transport taxes, it is advisable to set them according to the type of car. In the long-term perspective, this guarantees not only tax revenues but also a reduction in the harmful effects of the motor transport industry on the environment and energy.

At the same time, the successful testing of the developed methodology opens up perspectives for further research. Particularly, it is promising to study the effectiveness of various options for the design of energy taxes and taxes on environmental pollution. It is important that the developed approach can be adapted to compare the effectiveness of different groups of environmental taxes to comprehensively ensure the achievement of various tax policy goals. On the other hand, future research should consider comparisons of efficiency according to different tax instruments and vehicle usage.