ABSTRACT
This chapter reviews purchase and circulation taxes as they have some secondary Transport Demand Management (TDM) effects. Purchase and circulation taxes have a strong influence on the choice of vehicle and the technology associated with the fuel it uses. Circulation taxes, although distanced from the point of purchase, also largely have an impact upon vehicle choice rather than use. In a number of EU countries, existing car purchase taxes have been reformed to promote cleaner and low carbon vehicle technologies. VAT is a purchase tax, and there is no reason why a variable rate of VAT could not be levied. Italy does this; as well as a registration tax, Italians pay two rates of VAT on car purchases. Most developed countries have an annual registration tax entitling owners to use the public highway. TDM taxation measures need to be positioned to influence not the type of vehicles purchased, but decisions about the amount of travel and mode used.
