@aangel Increased taxes would increase revenue to the GOVERNMENT. This is considered a private benefit. This is becasue the Gov., which is in effect the business in this scenario, is gaining money that will ONLY benefit ITSELF.
High taxes on cars will RAISE the PRIVATE COSTS of car owners. HOWEVER, if the costs of drviing a car RISE wouldnt you consider riding a bus instead ? It would be cheaper.
Thus, more people may choose to ride a bus or use their car less of the time. Hence, car pollution will fall and external benefits will RISE.
That is, you and me will benefit from the reduced car pollution.
