Comparing Tax and Tax Reallocations Payments in Financing Rail Noise Abatement Programs: Results from a CE Valuation Study in Italy

Abstract

The paper examines the use of stated choice experiments (SC) to assess the economic value of alternative rail noise reduction interventions on the Brennero railway in Italy. The paper formally tests the econometric robustness of the SC estimates under three payment regimes: (a) a regional tax, where consumers must trade off welfare gains due to noise reduction for part of their income; (b) a transport tax reallocation scheme, where consumers must trade off a part of the tax payments that are currently spent on the public transport sector; and (c) an administration tax reallocation scheme, where consumers must trade off a part of the tax payments that are currently spent on the administration sector. The test results are varied. On the one hand, the SC estimates are found to be statistically different for the tax reallocation and the tax introduction regimes. This confirms previous valuation research results, and thus reiterates the hypothesis that states the inequality between marginal values of private income and public money. On the other hand, the SC estimates are not found to be statistically different for the two proposed tax reallocation regimes, suggesting that, in the case study investigated here, the marginal value of public money does not depend upon the budget source.