Impacts of vehicle automation in public revenues and transport equity. Economic challenges and policy paths for Buenos Aires

Connected and automated vehicles (CAVs) are likely to proliferate in the next decade. Together with shared and electric mobility, they can reshape the way we currently plan, operate and regulate transport systems. Alongside with their alleged benefits, a series of negative impacts can be derived from the incentives to move towards individual motorised mobility. One of the challenges cities and countries will face relates to public finance. A large proportion of fiscal revenues originate in the use of the car as we know it: license plate fees, fuel taxes, parking tickets and traffic fines, among others. The advent of electric and possibly shared CAVs will eliminate or drastically reduce these sources of revenue, which generally subsidize various aspects of the transport system, jeopardizing its financial sustainability. This plausible scenario can make current inequalities in terms of accessibility deeper, since lower income groups are less likely to own a car (even less a CAV) and depend more on transit and active modes to access urban opportunities. Hence, becoming more reliant on private motorization and underfunding public investments in other modes would be regressive from a socioeconomic standpoint. Based on the fiscal structure of the transport system in Buenos Aires, the aim of this paper is to identify the potential impact of CAVs in the city's finances. Considering the distributional effects of the resulting fiscal situation, we will present a set of policies and instruments that could help guarantee transport equity. •Transport-related revenue in BA is 158 USD PPPY (79% vehicle property, 21% use).•If private ownership prevails, CAVs can lower revenues by 18% (1.4% of total income).•If shared mobility takes over, CAVs can cause a drop of 58% (4.4% of total income).•Impact is greater on property taxes (57%), traffic fines (15%), and fuel taxes (6%).•Ensuring transport equity will require restructuring current tax schemes.