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This is really useful context, but doesn’t entirely invalidate my point, right?

We should reduce one type (possibly the most urgent), and then move on to solving the next?

Yes, if this tradeff wasn't made then EVs wouldn't be subsidized as they are across the world. But in some places the local problems are larger so they let people pay for negative externalities. I can't see a problem with that. There is surely also a progressive element to this: people who drive large cars are assumed to be wealthier so able to carry more of the city/regions revenue from taxes and fees.

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