With the objective of guiding private transportation in a more efficient direction, many cantons have introduced environmental vehicle taxes in recent years. A tax discount for energy efficiency or low CO2 emissions should provide incentives for the purchase of more economical vehicles.
The incentive tax on electricity with which the canton of Basel-Stadt has rewarded economical consumption since 1999 has a similar objective. This measure sees the city canton charge a tax on every consumed kilowatt hour of 8 % of the price. The money is redistributed to households and businesses in the form of an annual bonus.
Both environmental instruments are underpinned by a classic market law: when prices increase, the quantities demanded decline. By adjusting the effective prices, it should therefore be possible to guide energy demand. That is the theory at any rate. In practice, however, it turns out that consumers are not so easy to influence. This is shown by economists from the University of Lucerne in two studies on vehicle taxes and the Basel electricity incentive tax.