RESOURCE COSTS, PERCEIVED COSTS AND THE TREATMENT OF TAX IN EVALUATION

BASED ON THE CONCEPT OF CONSUMERS' SURPLUS, A METHOD OF ALLOWING FOR THE PRESENCE OF EXPENDITURE TAXES IN THE MONEY COST OF TRIPS IS DERIVED. PART OF THE MONEY COST IN SUCH A CASE REFLECTS MERELY A TRANSFER PAYMENT, AND DOES NOT REFLECT A REAL USE OF RESOURCES. A DEFINITION OF "REAL" RESOURCE COST, IN TERMS OF MONEY COST AND LEVELS OF EXPENDITURE TAXES, IS DERIVED FROM A SIMPLE MODEL BORROWED FROM WELFARE ECONOMICS. THIS DEFINITION IS THEN USED TO MODIFY THE CONVENTIONAL FORMULAE USED IN ECONOMIC EVALUATION TO GIVE THE CORRECT FORM OF "NONRESOURCE TERM" REFLECTING THE DIFFERENT VALUES OF PERCEIVED AND RESOURCE COST. THE READER MUST THEN PROVIDE HIS OWN ASSUMPTIONS ABOUT THE RELATION OF THE PERCEIVED COST OF TRIPS TO THEIR MONEY COST, IN ORDER TO DERIVE AN OPERATIONAL RULE TO MEASURE THE NET SOCIAL BENEFIT OF A PROJECT, CORRECTED FOR TAX EFFECTS. /TRRL/

  • Corporate Authors:

    Department of the Environment, England

    Mathematical Advisory Unit
    London SW1P 3EB,   England 
  • Authors:
    • Tyler, R M
  • Publication Date: 1970-3

Media Info

  • Features: Figures; References; Tables;
  • Pagination: 12 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00201488
  • Record Type: Publication
  • Source Agency: Transport and Road Research Laboratory (TRRL)
  • Files: TRIS
  • Created Date: Jun 11 1972 12:00AM