Abstract

Nowadays, all over the world, the car transport sector is one of the main factors responsible for the Greenhouse Gas Emissions.

The current systems of emission taxation do not take into consideration the distance travelled by cars; therefore, they are not fully

compliant with the “polluter pays” principle. In addition to the produced inequality, these systems do not encourage the reduction

of the distances travelled annually (with possible favorable effects on pollution and traffic). Some academic studies have

targeted the issue of introducing taxation based on the number of travelled kilometers in the motor insurance in developed

countries (USA, Canada, Western European countries). Our study evaluates the feasibility of introducing this system in an

emerging market (Romania). Using Monte Carlo simulations, the results show that the total tax, which includes insurance and

environmental tax, may have financial sustainable values for the population. The average value of the new tax would be 160

Euros (3.7% of the annual average wage) and 80% of the cars would be taxed between 100 Euros and 239 Euros. We also discuss

the obstacles in implementing this tax, respectively, the process of monitoring the distance travelled by cars.