Agnar Sandmo
- Published in print:
- 2000
- Published Online:
- November 2003
- ISBN:
- 9780198297987
- eISBN:
- 9780191596858
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/019829798X.003.0006
- Subject:
- Economics and Finance, Development, Growth, and Environmental
It has often been claimed that there will be a ‘double dividend’ from the introduction of environmental taxes. Not only will it improve the quality of the environment by substituting taxes that ...
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It has often been claimed that there will be a ‘double dividend’ from the introduction of environmental taxes. Not only will it improve the quality of the environment by substituting taxes that actually improve the allocation of resources for taxes that distort it but there will also be another social gain in addition to the primary one. The chapter takes a critical look at three notions of the double dividend—a more efficient tax system, a lower rate of unemployment, and a lower marginal cost of public funds. In all three cases, it is found that a double dividend is a real possibility, but there is no guarantee that it will actually occur. The analysis identifies the conditions under which green tax reforms are likely to be successful with respect to each of the three dividends.Less
It has often been claimed that there will be a ‘double dividend’ from the introduction of environmental taxes. Not only will it improve the quality of the environment by substituting taxes that actually improve the allocation of resources for taxes that distort it but there will also be another social gain in addition to the primary one. The chapter takes a critical look at three notions of the double dividend—a more efficient tax system, a lower rate of unemployment, and a lower marginal cost of public funds. In all three cases, it is found that a double dividend is a real possibility, but there is no guarantee that it will actually occur. The analysis identifies the conditions under which green tax reforms are likely to be successful with respect to each of the three dividends.
Anthony B. Atkinson
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199278558
- eISBN:
- 9780191601590
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199278555.003.0002
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter, together with chs. 10 to 11, approaches the question of development funding in a theoretical way, rather than by examining individual proposals for sources. Chapter 2 itself deals with ...
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This chapter, together with chs. 10 to 11, approaches the question of development funding in a theoretical way, rather than by examining individual proposals for sources. Chapter 2 itself deals with over‐arching issues and aims to set out a number of the common questions that arise in considering sources of new revenue for development finance. These concern the precise specification of the proposal, its relation with Official Development Assistance (ODA), and the administrative architecture. The key questions addressed in the different sections are: the role of the new sources; their fiscal architecture (flexibility in country involvement, institutional arrangements, fiscal federalism); the marginal cost of development funds (the leaky bucket argument) and the double dividend argument; the transfer problem (the possible effects of transfers on the economies of the donor and recipient countries); and the equivalent effects of different economic measures/policy instruments.Less
This chapter, together with chs. 10 to 11, approaches the question of development funding in a theoretical way, rather than by examining individual proposals for sources. Chapter 2 itself deals with over‐arching issues and aims to set out a number of the common questions that arise in considering sources of new revenue for development finance. These concern the precise specification of the proposal, its relation with Official Development Assistance (ODA), and the administrative architecture. The key questions addressed in the different sections are: the role of the new sources; their fiscal architecture (flexibility in country involvement, institutional arrangements, fiscal federalism); the marginal cost of development funds (the leaky bucket argument) and the double dividend argument; the transfer problem (the possible effects of transfers on the economies of the donor and recipient countries); and the equivalent effects of different economic measures/policy instruments.
Agnar Sandmo
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199278558
- eISBN:
- 9780191601590
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199278555.003.0003
- Subject:
- Economics and Finance, Development, Growth, and Environmental
The taxation of externalities is the subject of this first of seven chapters that examine potential sources of development funding. It considers the possible role of environmental taxes for economic ...
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The taxation of externalities is the subject of this first of seven chapters that examine potential sources of development funding. It considers the possible role of environmental taxes for economic development. The chapter starts with a review of the welfare economics theory of environmental taxation in a single closed economy (analytical details are provided in an appendix A). The different sections then discuss alternatives to taxes as instruments of environmental policy, considering both fixed and transferable quotas; review the double dividend issue; consider the extent to which distributional concerns should be reflected in the design of environmental policy; take up some special problems in the application of environmental externalities to developing economies; extend the analysis from the single country case to the case of global externalities, where each individual country is affected by the environmental pollution of all other countries (the discussion is with specific reference to the carbon tax, and a formal analysis in the context of a two‐country model is given in a second appendix); consider the political economy of global environmental taxes, by comparing alternative tax designs with regard to the equity‐efficiency trade‐off; discuss some practical problems of tax collection; and evaluate the revenue potential of environmental taxes with special reference to the carbon tax.Less
The taxation of externalities is the subject of this first of seven chapters that examine potential sources of development funding. It considers the possible role of environmental taxes for economic development. The chapter starts with a review of the welfare economics theory of environmental taxation in a single closed economy (analytical details are provided in an appendix A). The different sections then discuss alternatives to taxes as instruments of environmental policy, considering both fixed and transferable quotas; review the double dividend issue; consider the extent to which distributional concerns should be reflected in the design of environmental policy; take up some special problems in the application of environmental externalities to developing economies; extend the analysis from the single country case to the case of global externalities, where each individual country is affected by the environmental pollution of all other countries (the discussion is with specific reference to the carbon tax, and a formal analysis in the context of a two‐country model is given in a second appendix); consider the political economy of global environmental taxes, by comparing alternative tax designs with regard to the equity‐efficiency trade‐off; discuss some practical problems of tax collection; and evaluate the revenue potential of environmental taxes with special reference to the carbon tax.
Stefan Speck, Philip Summerton, Daniel Lee, and Kirsten Wiebe
- Published in print:
- 2011
- Published Online:
- May 2011
- ISBN:
- 9780199584505
- eISBN:
- 9780191725012
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199584505.003.0005
- Subject:
- Economics and Finance, Macro- and Monetary Economics
ETRs have been implemented in several of the old EU member states, such as Denmark, Germany, Finland, Netherlands, Sweden, and the UK. This chapter very briefly identifies the key characteristics of ...
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ETRs have been implemented in several of the old EU member states, such as Denmark, Germany, Finland, Netherlands, Sweden, and the UK. This chapter very briefly identifies the key characteristics of these green tax reform packages, with a special focus on Germany and the UK. Recent years have seen a growth in support for ETRs in the new EU member states, with Estonia and the Czech Republic introducing this policy instrument, and the chapter discusses the prospects for ETR in new EU member states, with a focus on the Estonian ETR, highlighting some differences in the overall revenue structure between old and new EU member states. The chapter then reviews the theoretical literature on ETR and the ‘double dividend’ hypothesis, before moving on to a review of the empirical modelling literature that assesses the effects of the ETRs on the environment and the economy through estimates of changes in emissions, sectoral effects, such as changes in output, employment, and trade, and macroeconomic variables, such as GDP and total employment.Less
ETRs have been implemented in several of the old EU member states, such as Denmark, Germany, Finland, Netherlands, Sweden, and the UK. This chapter very briefly identifies the key characteristics of these green tax reform packages, with a special focus on Germany and the UK. Recent years have seen a growth in support for ETRs in the new EU member states, with Estonia and the Czech Republic introducing this policy instrument, and the chapter discusses the prospects for ETR in new EU member states, with a focus on the Estonian ETR, highlighting some differences in the overall revenue structure between old and new EU member states. The chapter then reviews the theoretical literature on ETR and the ‘double dividend’ hypothesis, before moving on to a review of the empirical modelling literature that assesses the effects of the ETRs on the environment and the economy through estimates of changes in emissions, sectoral effects, such as changes in output, employment, and trade, and macroeconomic variables, such as GDP and total employment.
Machiko Nissanke
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199278558
- eISBN:
- 9780191601590
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199278555.003.0004
- Subject:
- Economics and Finance, Development, Growth, and Environmental
The principal objective here is to assess the potential of currency transactions taxes (CTTs) – the celebrated Tobin tax – to raise revenues that can be used for developmental purposes. Thus, though ...
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The principal objective here is to assess the potential of currency transactions taxes (CTTs) – the celebrated Tobin tax – to raise revenues that can be used for developmental purposes. Thus, though Tobin proposed and others assessed CTTs in terms of reducing exchange rate volatility and improving macroeconomic policy environments, this chapter considers the CTT first and foremost from the standpoint of revenue and treats its potential to achieve valuable double dividends (such as the promotion of financial stability and policy autonomy) as a subsidiary objective. With a view of establishing the ‘permissible’ range of tax rates to obtain realistic estimates of revenue potential from CTTs, the debate on the effects of CTTs on market liquidity and the efficiency of foreign exchange markets is reviewed, and the P. B. Spahn proposal for a two‐tier currency tax briefly assessed. Next, a number of issues raised in the debate on the technical and political feasibility of CTTs are discussed, followed by an evaluation of several new proposals, such as those advanced by R. Schmidt and R. P. Mendez. The last two sections of the chapter present estimates of the potential revenue from CTTs in light of recent changes in the composition and structure of foreign exchange markets and give a concluding assessment of the potential of CTTs as a revenue‐raising tax instrument and their ability to achieve double dividends.Less
The principal objective here is to assess the potential of currency transactions taxes (CTTs) – the celebrated Tobin tax – to raise revenues that can be used for developmental purposes. Thus, though Tobin proposed and others assessed CTTs in terms of reducing exchange rate volatility and improving macroeconomic policy environments, this chapter considers the CTT first and foremost from the standpoint of revenue and treats its potential to achieve valuable double dividends (such as the promotion of financial stability and policy autonomy) as a subsidiary objective. With a view of establishing the ‘permissible’ range of tax rates to obtain realistic estimates of revenue potential from CTTs, the debate on the effects of CTTs on market liquidity and the efficiency of foreign exchange markets is reviewed, and the P. B. Spahn proposal for a two‐tier currency tax briefly assessed. Next, a number of issues raised in the debate on the technical and political feasibility of CTTs are discussed, followed by an evaluation of several new proposals, such as those advanced by R. Schmidt and R. P. Mendez. The last two sections of the chapter present estimates of the potential revenue from CTTs in light of recent changes in the composition and structure of foreign exchange markets and give a concluding assessment of the potential of CTTs as a revenue‐raising tax instrument and their ability to achieve double dividends.
Mikael Skou Andersen
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199570683
- eISBN:
- 9780191723186
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199570683.003.0001
- Subject:
- Economics and Finance, Public and Welfare, International
This chapter reviews the theoretical debate on the properties of environmental tax reforms and implications for competitiveness. Starting from the Porter hypothesis, a claim was made for improvements ...
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This chapter reviews the theoretical debate on the properties of environmental tax reforms and implications for competitiveness. Starting from the Porter hypothesis, a claim was made for improvements in competitiveness from shifting taxation from good to bad – from labour to pollution. The chapter argues with reference to Leibenstein (1966) that the benefits of tax‐shifting need to be appreciated not only from the perspective of allocative efficiency, but also from associated improvements in incentive efficiency. The review is followed by a closer inspection of the concept of competitiveness, whereby both its broader connotations as well as some official definitions are considered. The purpose is to present a clarification of the conceptual and methodological basis for the assessment of competitiveness impacts for energy‐intensive industries and European economies undertaken in this book. In the final section, the chapter presents the research methodology underlying the book as a whole and provides a brief introduction to individual chapters. The need for a complementary research design combining a top‐down macroeconomic with bottom‐up sectoral approaches is argued.Less
This chapter reviews the theoretical debate on the properties of environmental tax reforms and implications for competitiveness. Starting from the Porter hypothesis, a claim was made for improvements in competitiveness from shifting taxation from good to bad – from labour to pollution. The chapter argues with reference to Leibenstein (1966) that the benefits of tax‐shifting need to be appreciated not only from the perspective of allocative efficiency, but also from associated improvements in incentive efficiency. The review is followed by a closer inspection of the concept of competitiveness, whereby both its broader connotations as well as some official definitions are considered. The purpose is to present a clarification of the conceptual and methodological basis for the assessment of competitiveness impacts for energy‐intensive industries and European economies undertaken in this book. In the final section, the chapter presents the research methodology underlying the book as a whole and provides a brief introduction to individual chapters. The need for a complementary research design combining a top‐down macroeconomic with bottom‐up sectoral approaches is argued.
Dale W. Jorgenson, Richard J. Goettle, Mun S. Ho, and Peter J. Wilcoxen
- Published in print:
- 2014
- Published Online:
- September 2014
- ISBN:
- 9780262027090
- eISBN:
- 9780262318563
- Item type:
- book
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262027090.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Energy utilization, especially from fossil fuels, creates hidden costs in the form of pollution and environmental damages. The costs are well-documented but are hidden in the sense that they occur ...
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Energy utilization, especially from fossil fuels, creates hidden costs in the form of pollution and environmental damages. The costs are well-documented but are hidden in the sense that they occur outside the market, are not reflected in market prices, and are not taken into account by energy users. Double Dividend presents a novel method for designing environmental taxes that correct market prices so that they reflect the true cost of energy. The resulting revenue can be used in reducing the burden of the overall tax system and improving the performance of the economy, creating the double dividend of the title. The authors simulate the impact of environmental taxes on the U.S. economy using their Intertemporal General Equilibrium Model (IGEM). This highly innovative model incorporates expectations about future prices and policies. The model is estimated econometrically from an extensive 50-year dataset to incorporate the heterogeneity of producers and consumers. This approach generates confidence intervals for the outcomes of changes in economic policies, a new feature for models used in analyzing energy and environmental policies. These outcomes include the welfare impacts on individual households, distinguished by demographic characteristics, and for society as a whole, decomposed between efficiency and equity.Less
Energy utilization, especially from fossil fuels, creates hidden costs in the form of pollution and environmental damages. The costs are well-documented but are hidden in the sense that they occur outside the market, are not reflected in market prices, and are not taken into account by energy users. Double Dividend presents a novel method for designing environmental taxes that correct market prices so that they reflect the true cost of energy. The resulting revenue can be used in reducing the burden of the overall tax system and improving the performance of the economy, creating the double dividend of the title. The authors simulate the impact of environmental taxes on the U.S. economy using their Intertemporal General Equilibrium Model (IGEM). This highly innovative model incorporates expectations about future prices and policies. The model is estimated econometrically from an extensive 50-year dataset to incorporate the heterogeneity of producers and consumers. This approach generates confidence intervals for the outcomes of changes in economic policies, a new feature for models used in analyzing energy and environmental policies. These outcomes include the welfare impacts on individual households, distinguished by demographic characteristics, and for society as a whole, decomposed between efficiency and equity.
Stefan Speck and Jirina Jilkova
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199570683
- eISBN:
- 9780191723186
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199570683.003.0002
- Subject:
- Economics and Finance, Public and Welfare, International
This chapter provides an overview of carbon‐energy taxation introduced under environmental tax reforms in Europe. First a broad overview of the relative shares of taxes on energy, transport, and ...
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This chapter provides an overview of carbon‐energy taxation introduced under environmental tax reforms in Europe. First a broad overview of the relative shares of taxes on energy, transport, and pollution is presented. This overview treats developments in EU‐15 as well as in the ten new member states and shows that tax‐reform proposals are considered across Europe as a whole. Developments in tax‐shifting are most advanced in Denmark, Finland, Germany, Netherlands, Slovenia, Sweden, and the UK. Comprehensive reform proposals have also been put forward in countries such as France, Italy, and Belgium, while currently among the new member states Estonia and Czech Republic have announced tax shifts to be implemented. The chapter investigates whether there have been ‘implicit’ tax shifts, i.e. by examining how the ratios of labour taxation‐to‐GDP and of environmental taxes‐to‐GDP have developed during the last decade. Furthermore, the chapter looks into how European countries have designed their tax shifts, and in this connection how the concern of potential losses of competitiveness have been addressed and mitigated. This is done by explaining the different principles and measures applied in the seven countries which have already introduced tax shifts.Less
This chapter provides an overview of carbon‐energy taxation introduced under environmental tax reforms in Europe. First a broad overview of the relative shares of taxes on energy, transport, and pollution is presented. This overview treats developments in EU‐15 as well as in the ten new member states and shows that tax‐reform proposals are considered across Europe as a whole. Developments in tax‐shifting are most advanced in Denmark, Finland, Germany, Netherlands, Slovenia, Sweden, and the UK. Comprehensive reform proposals have also been put forward in countries such as France, Italy, and Belgium, while currently among the new member states Estonia and Czech Republic have announced tax shifts to be implemented. The chapter investigates whether there have been ‘implicit’ tax shifts, i.e. by examining how the ratios of labour taxation‐to‐GDP and of environmental taxes‐to‐GDP have developed during the last decade. Furthermore, the chapter looks into how European countries have designed their tax shifts, and in this connection how the concern of potential losses of competitiveness have been addressed and mitigated. This is done by explaining the different principles and measures applied in the seven countries which have already introduced tax shifts.
Dale W. Jorgenson, Richard J. Goettle, Mun S. Ho, and Peter J. Wilcoxen
- Published in print:
- 2014
- Published Online:
- September 2014
- ISBN:
- 9780262027090
- eISBN:
- 9780262318563
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262027090.003.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This book presents a new approach for designing energy and environmental policies for the United States. In the absence of hidden costs of energy the role of government policy would be to maintain ...
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This book presents a new approach for designing energy and environmental policies for the United States. In the absence of hidden costs of energy the role of government policy would be to maintain competitive and smoothly function markets for energy. Environmental policy requires that users of fossil fuels bear the costs of health and other damages. This can be achieved by levying taxes on emissions that are equal to the incremental damages. By using the revenues from environmental taxes we are able to reduce the rate of taxation on capital income and produce a double dividend, consisting of substantial reductions in pollution and an improvement in economic performance.Less
This book presents a new approach for designing energy and environmental policies for the United States. In the absence of hidden costs of energy the role of government policy would be to maintain competitive and smoothly function markets for energy. Environmental policy requires that users of fossil fuels bear the costs of health and other damages. This can be achieved by levying taxes on emissions that are equal to the incremental damages. By using the revenues from environmental taxes we are able to reduce the rate of taxation on capital income and produce a double dividend, consisting of substantial reductions in pollution and an improvement in economic performance.
