Promoting Sustainable Environmental Practices Amongst Automobile Consumers: An Evaluation of the Impacts of Pursuing Innovations in Tax Regulations

The growing importance of environmental sustainability has resulted in governments pursuing innovative regulatory changes in order to achieve this goal. The aim of this paper is to evaluate critically whether pursuing innovative regulations in the realm of environmental taxation have elicited more sustainable practices amongst automobile consumers in Spain. The finding is that the tax innovations of the Spanish government that seek to internalise externalities, namely the registration tax and fuel tax, but not the annual circulation tax, are leading automobile consumers to pursue more environmentally sustainable practices, and are also resulting in the automotive sector itself pursuing innovations in the form of strategic alliances to increase the level of product and process innovations so as to achieve greater environmental sustainability.