Tourist tax to promote rentals of low-emission vehicles

Abstract

In the Canary Islands (Spain), the tourism boom has been paralleled by sharp growth in the carrental sector. However, this economic activity is associated with problems such as rising levels ofvehicle emissions. In this article, we discuss, on the one hand, the introduction of a tax to inter-nalise the costs of emissions from car rental fleets and, on the other, the measures to reward userswho rent environmentally-friendly cars. For this purpose, we propose a model based on statisticaldecision theory, from which a Bayesian rule is derived. According to this model, the tax increaseswith the number of days the car is rented but decreases in line with the environmental efficiency ofthe vehicle. A data sample of visitors to the Canary Islands is used to compare the covariatesinvolved in computing the number of car rental days and the corresponding tax payable