Can Environmental Tax Reduce Dilapidated Motor Vehicles Importation and Pollution? Insights from Dar-es-Salaam, Tanzania

Abstract

The influence of tax regime in reducing dilapidated vehicles’ demand and attendant pollution is puzzling global south cities. This article provides an assessment on how environmental tax is or is not curbing down the importation of the Dilapidated Motor Vehicles (DMVs) with a view to reduce vehicular emissions in the city of Dar es Salaam, Tanzania. A multilevel perspective employing mixed methods of data collection was used to collect qualitative and quantitative data through document review, group discussions, in-depth interviews from selected Members of Parliament, policymakers, government officials, and brand new as well as DMVs dealers. Content, trend and discourse analysis enabled to interpret qualitative data. Findings reveal that taxing importation of DMVs is not significantly reducing air pollution. The side effects of the increased DMVs import in polluting the environment are increasing due to the rise in income levels, population increase and technical challenges of estimating marginal social cost. As DMVs tax was not reflected in the exporter’s cost schedule, the non-inclusion gives a market failure scenario a la Pigou Theorem. Rethinking of an optimal environmental tax remains a complex sociopolitical issue calling for research and policy attention.

Keywords: Dilapidated Motor Vehicle, environmental tax, demand, air pollution, Tanzania