Jean‐Philippe Barde and Nils Axel Braathen
- Published in print:
- 2005
- Published Online:
- October 2005
- ISBN:
- 9780199278596
- eISBN:
- 9780191602856
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199278598.003.0005
- Subject:
- Economics and Finance, Financial Economics
Although the need for environmentally related taxes, charges, and tradable permits is widely recognized, in practice command-and-control types of regulations still dominate the environmental ...
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Although the need for environmentally related taxes, charges, and tradable permits is widely recognized, in practice command-and-control types of regulations still dominate the environmental landscape. Moreover, green taxes and other environmentally related levies on motor fuel, electricity, packaging, and landfill waste still exhibit a large number of shortcomings. In most cases, the externality-tax linkage is weak, the rates are low, the bases are riddled with exemptions (for example, for coal, which is often subsidized, and electricity), taxes overlap with regulations, and international coordination, required to contain border-crossing externalities, is not forthcoming. Two main fears seem to stall further progress — the perceived regressivity of environmental levies and their negative impact on sectoral competitiveness. However, the regressivity issue can be tackled by ex-post compensation measures and the loss of competitiveness by ex-ante exemptions and reduced rates. Green tax reform is unlikely to make much progress unless some minimum level playing field is agreed upon between OECD countries.Less
Although the need for environmentally related taxes, charges, and tradable permits is widely recognized, in practice command-and-control types of regulations still dominate the environmental landscape. Moreover, green taxes and other environmentally related levies on motor fuel, electricity, packaging, and landfill waste still exhibit a large number of shortcomings. In most cases, the externality-tax linkage is weak, the rates are low, the bases are riddled with exemptions (for example, for coal, which is often subsidized, and electricity), taxes overlap with regulations, and international coordination, required to contain border-crossing externalities, is not forthcoming. Two main fears seem to stall further progress — the perceived regressivity of environmental levies and their negative impact on sectoral competitiveness. However, the regressivity issue can be tackled by ex-post compensation measures and the loss of competitiveness by ex-ante exemptions and reduced rates. Green tax reform is unlikely to make much progress unless some minimum level playing field is agreed upon between OECD countries.
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.
Agnar Sandmo
- Published in print:
- 2000
- Published Online:
- November 2003
- ISBN:
- 9780198297987
- eISBN:
- 9780191596858
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/019829798X.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
The book is an application of the modern theory of public economics to central issues in the design of environmental policy. Ch. 1 reviews the basic issues in a simple partial equilibrium framework. ...
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The book is an application of the modern theory of public economics to central issues in the design of environmental policy. Ch. 1 reviews the basic issues in a simple partial equilibrium framework. In Ch. 2, the environment is incorporated in a general equilibrium framework, emphasizing the perspective on the environment as a public good and the use of taxes as a means of correcting market failure. Ch. 3 analyses policies that are alternatives to taxes, such as regulations and quotas, and Ch. 4 reviews alternative methods of assessing the social benefits from environmental policies. Ch. 5 sets the design of environmental taxes in the framework of optimal tax theory and makes clear the need to see such taxes as parts of the overall tax system. Ch. 6 is concerned with various notions of the double dividend from green taxes and raises the issue of whether environmental taxes lower the marginal cost of public funds. Finally, Ch. 7 takes up international and political economy aspects of environmental policy.Less
The book is an application of the modern theory of public economics to central issues in the design of environmental policy. Ch. 1 reviews the basic issues in a simple partial equilibrium framework. In Ch. 2, the environment is incorporated in a general equilibrium framework, emphasizing the perspective on the environment as a public good and the use of taxes as a means of correcting market failure. Ch. 3 analyses policies that are alternatives to taxes, such as regulations and quotas, and Ch. 4 reviews alternative methods of assessing the social benefits from environmental policies. Ch. 5 sets the design of environmental taxes in the framework of optimal tax theory and makes clear the need to see such taxes as parts of the overall tax system. Ch. 6 is concerned with various notions of the double dividend from green taxes and raises the issue of whether environmental taxes lower the marginal cost of public funds. Finally, Ch. 7 takes up international and political economy aspects of environmental policy.
Hiromitsu Ishi
- Published in print:
- 2001
- Published Online:
- November 2003
- ISBN:
- 9780199242566
- eISBN:
- 9780191596452
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199242569.003.0016
- Subject:
- Economics and Finance, South and East Asia
Design of environmental taxes are picked up as an argument of whether or not environmental taxes should be practically introduced into the Japanese tax system, since it is still immature. It is ...
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Design of environmental taxes are picked up as an argument of whether or not environmental taxes should be practically introduced into the Japanese tax system, since it is still immature. It is necessary to investigate the background of environmental issues and protection in the past, and possible way of designing a desirable form of environmental taxes, such as a carbon/ energy tax.Less
Design of environmental taxes are picked up as an argument of whether or not environmental taxes should be practically introduced into the Japanese tax system, since it is still immature. It is necessary to investigate the background of environmental issues and protection in the past, and possible way of designing a desirable form of environmental taxes, such as a carbon/ energy tax.
Sijbren Cnossen (ed.)
- Published in print:
- 2005
- Published Online:
- October 2005
- ISBN:
- 9780199278596
- eISBN:
- 9780191602856
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199278598.001.0001
- Subject:
- Economics and Finance, Financial Economics
Excise taxes on smoking, drinking, gambling, polluting, and driving are always topical and controversial. Not only are these taxes convenient sources of government revenue, they can also be designed ...
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Excise taxes on smoking, drinking, gambling, polluting, and driving are always topical and controversial. Not only are these taxes convenient sources of government revenue, they can also be designed to reflect the external costs that consumers or producers of excisable products impose on other people. Global warming, acid rain, traffic congestion, and the economic costs of tobacco and alcohol consumption are problems that can be corrected through selective taxes and other regulatory instruments. Addressing these and other issues, this book by internationally recognized experts analyses the art of excise taxation, providing a systematic, insightful, and often provocative treatment of a major fiscal instrument that policy-makers often neglect, and that gets little attention in the professional literature. This comprehensive guide to the debate on excise tax policy will be invaluable to government officials, policy-makers, academics and students of taxation, and those working in relevant industries.Less
Excise taxes on smoking, drinking, gambling, polluting, and driving are always topical and controversial. Not only are these taxes convenient sources of government revenue, they can also be designed to reflect the external costs that consumers or producers of excisable products impose on other people. Global warming, acid rain, traffic congestion, and the economic costs of tobacco and alcohol consumption are problems that can be corrected through selective taxes and other regulatory instruments. Addressing these and other issues, this book by internationally recognized experts analyses the art of excise taxation, providing a systematic, insightful, and often provocative treatment of a major fiscal instrument that policy-makers often neglect, and that gets little attention in the professional literature. This comprehensive guide to the debate on excise tax policy will be invaluable to government officials, policy-makers, academics and students of taxation, and those working in relevant industries.
Terry Barker, Sudhir Junankar, Hector Pollitt, and Philip Summerton
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199570683
- eISBN:
- 9780191723186
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199570683.003.0007
- Subject:
- Economics and Finance, Public and Welfare, International
This chapter assesses the macroeconomic effects of carbon‐energy taxation introduced under unilateral environmental tax reform (ETR) in the 1990s undertaken in six member states of the European ...
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This chapter assesses the macroeconomic effects of carbon‐energy taxation introduced under unilateral environmental tax reform (ETR) in the 1990s undertaken in six member states of the European Union: Denmark, Finland, Germany, the Netherlands, Sweden, and the UK. The effects are estimated using the large‐scale Energy–Environment–Economy (E3) model for Europe, E3ME, which covers the countries involved, as well as the complete single market, so that the effects on other economies can be considered, along with any effects on competitiveness. The method is to identify the key characteristics of the green tax reform packages and include these in the modelling of the price and non‐price effects of the ETR on energy use and international trade in E3ME. The effects are then compared with a ‘reference case’ (i.e. a counterfactual case) generated by E3ME over the period 1995–2012 including current and expected developments in the EU economy, e.g. the impact of the EU Emission Trading Scheme, but without the ETR. The ETRs caused a modest reduction in fuel use and greenhouse gas emissions in all six of countries and a very small increase in employment and GDP. All the ETRs were assumed to be revenue‐neutral. The revenue recycling meant that the cost of ETR to the economy was significantly reduced and in several cases resulted in an increase in GDP. The method for revenue recycling strongly affects the results, as does the scale of exemptions offered to certain fuel user groups.Less
This chapter assesses the macroeconomic effects of carbon‐energy taxation introduced under unilateral environmental tax reform (ETR) in the 1990s undertaken in six member states of the European Union: Denmark, Finland, Germany, the Netherlands, Sweden, and the UK. The effects are estimated using the large‐scale Energy–Environment–Economy (E3) model for Europe, E3ME, which covers the countries involved, as well as the complete single market, so that the effects on other economies can be considered, along with any effects on competitiveness. The method is to identify the key characteristics of the green tax reform packages and include these in the modelling of the price and non‐price effects of the ETR on energy use and international trade in E3ME. The effects are then compared with a ‘reference case’ (i.e. a counterfactual case) generated by E3ME over the period 1995–2012 including current and expected developments in the EU economy, e.g. the impact of the EU Emission Trading Scheme, but without the ETR. The ETRs caused a modest reduction in fuel use and greenhouse gas emissions in all six of countries and a very small increase in employment and GDP. All the ETRs were assumed to be revenue‐neutral. The revenue recycling meant that the cost of ETR to the economy was significantly reduced and in several cases resulted in an increase in GDP. The method for revenue recycling strongly affects the results, as does the scale of exemptions offered to certain fuel user groups.
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.
A. B. Atkinson (ed.)
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199278558
- eISBN:
- 9780191601590
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199278555.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
As their Millennium Development Goals, world leaders have pledged by 2015 to halve the number of people living in extreme poverty and hunger, to achieve universal primary education, to reduce child ...
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As their Millennium Development Goals, world leaders have pledged by 2015 to halve the number of people living in extreme poverty and hunger, to achieve universal primary education, to reduce child mortality, to halt the spread of HIV/AIDS, and to halve the number of people without safe drinking water. Achieving these goals requires a large increase in the flow of financial resources to developing countries – double the present development assistance from abroad. In examining innovative ways to secure these resources, this book, which is part of the UNU–WIDER Studies in Development Economics series, sets out a framework for the economic analysis of different sources of funding and applying the tools of modern public economics to identify the key issues. It examines the role of new sources of overseas aid, considers the fiscal architecture and the lessons that can be learned from federal fiscal systems, asks how far increased transfers impose a burden on donors, and investigates how far the raising of resources can be separated from their use. In turn, the book examines global environmental taxes (such as a carbon tax), the taxation of currency transactions (the Tobin tax), a development‐focused allocation of Special Drawing Rights by the International Monetary Fund (IMF), the UK Government proposal for an International Finance Facility, increased private donations for development purposes, a global lottery (or premium bond), and increased remittances by emigrants. In each case, it considers the feasibility of the proposal and the resources that it can realistically raise, and offers new perspectives and insights into these new and controversial proposals.Less
As their Millennium Development Goals, world leaders have pledged by 2015 to halve the number of people living in extreme poverty and hunger, to achieve universal primary education, to reduce child mortality, to halt the spread of HIV/AIDS, and to halve the number of people without safe drinking water. Achieving these goals requires a large increase in the flow of financial resources to developing countries – double the present development assistance from abroad. In examining innovative ways to secure these resources, this book, which is part of the UNU–WIDER Studies in Development Economics series, sets out a framework for the economic analysis of different sources of funding and applying the tools of modern public economics to identify the key issues. It examines the role of new sources of overseas aid, considers the fiscal architecture and the lessons that can be learned from federal fiscal systems, asks how far increased transfers impose a burden on donors, and investigates how far the raising of resources can be separated from their use. In turn, the book examines global environmental taxes (such as a carbon tax), the taxation of currency transactions (the Tobin tax), a development‐focused allocation of Special Drawing Rights by the International Monetary Fund (IMF), the UK Government proposal for an International Finance Facility, increased private donations for development purposes, a global lottery (or premium bond), and increased remittances by emigrants. In each case, it considers the feasibility of the proposal and the resources that it can realistically raise, and offers new perspectives and insights into these new and controversial proposals.
Terry Barker, Sudhir Junankar, Hector Pollitt, and Philip Summerton
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199570683
- eISBN:
- 9780191723186
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199570683.003.0008
- Subject:
- Economics and Finance, Public and Welfare, International
This chapter assesses the macroeconomic effects of carbon‐energy taxation introduced under unilateral environmental tax reform (ETR) in the 1990s undertaken in six member states of the European ...
More
This chapter assesses the macroeconomic effects of carbon‐energy taxation introduced under unilateral environmental tax reform (ETR) in the 1990s undertaken in six member states of the European Union: Denmark, Finland, Germany, the Netherlands, Sweden, and the UK. The effects are estimated using the large‐scale Energy–Environment–Economy (E3) model for Europe, E3ME, which covers the countries involved as well as the complete single market, so that the effects on other economies can be considered, along with any effects on competitiveness. The method is to identify the key characteristics of the green tax reform packages and include these in the modelling of the price and non‐price effects of the ETR on energy use and international trade in E3ME. The effects are then compared with a ‘reference case’ (i.e. a counterfactual case) generated by E3ME over the period 1995–2012, including current and expected developments in the EU economy, e.g. the impact of the EU Emission Trading Scheme, but without the ETR. The revenue recycling meant that the cost of ETR to the economy was significantly reduced and in several cases resulted in an increase in GDP. The method for revenue recycling strongly affects the results, as does the scale of exemptions offered to certain fuel user groups.Less
This chapter assesses the macroeconomic effects of carbon‐energy taxation introduced under unilateral environmental tax reform (ETR) in the 1990s undertaken in six member states of the European Union: Denmark, Finland, Germany, the Netherlands, Sweden, and the UK. The effects are estimated using the large‐scale Energy–Environment–Economy (E3) model for Europe, E3ME, which covers the countries involved as well as the complete single market, so that the effects on other economies can be considered, along with any effects on competitiveness. The method is to identify the key characteristics of the green tax reform packages and include these in the modelling of the price and non‐price effects of the ETR on energy use and international trade in E3ME. The effects are then compared with a ‘reference case’ (i.e. a counterfactual case) generated by E3ME over the period 1995–2012, including current and expected developments in the EU economy, e.g. the impact of the EU Emission Trading Scheme, but without the ETR. The revenue recycling meant that the cost of ETR to the economy was significantly reduced and in several cases resulted in an increase in GDP. The method for revenue recycling strongly affects the results, as does the scale of exemptions offered to certain fuel user groups.
Paul Ekins and Stefan Speck (eds)
- Published in print:
- 2011
- Published Online:
- May 2011
- ISBN:
- 9780199584505
- eISBN:
- 9780191725012
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199584505.001.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This book explores the economic and environmental implications of environmental tax reform (ETR), also known as green fiscal reform, which entails a reduction in taxes on labour and profits, and a ...
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This book explores the economic and environmental implications of environmental tax reform (ETR), also known as green fiscal reform, which entails a reduction in taxes on labour and profits, and a corresponding increase in taxes on pollution and the use of natural resources. The book investigates the hypothesis that such a tax shift can increase resource productivity and reduce pollution, and increase employment and innovation in environmental technologies, with potentially positive effects on output and human welfare. The detailed modelling and other analysis reported in the book suggest that ETR can indeed have these effects, although the GDP impacts are small and may be positive or negative, such that ETR emerges as an important cost-effective policy for environmental improvement. However, because countries' fiscal systems and taxation policies are politically very sensitive, the actual implementation of ETR is never likely to be simple, and consideration needs to be given to the political and cultural context of the country, and to the distributional impacts on both firms and households. Low-income households may require compensation if the tax shift is not to be regressive, while the impacts on the competitiveness of firms may be minimized, and the positive environmental impacts much magnified, if the ETR could be carried out at a global level.Less
This book explores the economic and environmental implications of environmental tax reform (ETR), also known as green fiscal reform, which entails a reduction in taxes on labour and profits, and a corresponding increase in taxes on pollution and the use of natural resources. The book investigates the hypothesis that such a tax shift can increase resource productivity and reduce pollution, and increase employment and innovation in environmental technologies, with potentially positive effects on output and human welfare. The detailed modelling and other analysis reported in the book suggest that ETR can indeed have these effects, although the GDP impacts are small and may be positive or negative, such that ETR emerges as an important cost-effective policy for environmental improvement. However, because countries' fiscal systems and taxation policies are politically very sensitive, the actual implementation of ETR is never likely to be simple, and consideration needs to be given to the political and cultural context of the country, and to the distributional impacts on both firms and households. Low-income households may require compensation if the tax shift is not to be regressive, while the impacts on the competitiveness of firms may be minimized, and the positive environmental impacts much magnified, if the ETR could be carried out at a global level.
Paul Ekins and Stefan Speck
- Published in print:
- 2011
- Published Online:
- May 2011
- ISBN:
- 9780199584505
- eISBN:
- 9780191725012
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199584505.003.0013
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter pulls together the findings described in the book, draws conclusions, and makes recommendations for an ETR in Europe. It treats specifically the implications of ETR in Europe for the new ...
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This chapter pulls together the findings described in the book, draws conclusions, and makes recommendations for an ETR in Europe. It treats specifically the implications of ETR in Europe for the new member states of Central and Eastern Europe, for Europe as a whole, and for the rest of the world. The book concludes with recommendations for ETR design in Europe based on the conclusions of the PETRE project.Less
This chapter pulls together the findings described in the book, draws conclusions, and makes recommendations for an ETR in Europe. It treats specifically the implications of ETR in Europe for the new member states of Central and Eastern Europe, for Europe as a whole, and for the rest of the world. The book concludes with recommendations for ETR design in Europe based on the conclusions of the PETRE project.
Paolo Agnolucci
- Published in print:
- 2011
- Published Online:
- May 2011
- ISBN:
- 9780199584505
- eISBN:
- 9780191725012
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199584505.003.0007
- Subject:
- Economics and Finance, Macro- and Monetary Economics
The objective of ETRs is to improve the environment (for example, by reducing carbon emissions) while reducing other taxes which may have a negative economic effect. Often ETRs also have the ...
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The objective of ETRs is to improve the environment (for example, by reducing carbon emissions) while reducing other taxes which may have a negative economic effect. Often ETRs also have the objective of increasing employment. The aim of this chapter is to estimate the effect on the demand for energy and the level of unemployment of the UK and German ETRs that have been implemented. In order to do this, we estimate a specification based on a translog cost function which allows us to model the cross-price elasticities among capital, labour, energy, material, and services.Less
The objective of ETRs is to improve the environment (for example, by reducing carbon emissions) while reducing other taxes which may have a negative economic effect. Often ETRs also have the objective of increasing employment. The aim of this chapter is to estimate the effect on the demand for energy and the level of unemployment of the UK and German ETRs that have been implemented. In order to do this, we estimate a specification based on a translog cost function which allows us to model the cross-price elasticities among capital, labour, energy, material, and services.
Michael Rauscher
- Published in print:
- 2000
- Published Online:
- February 2013
- ISBN:
- 9780226094816
- eISBN:
- 9780226094809
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226094809.003.0007
- Subject:
- Economics and Finance, Development, Growth, and Environmental
The main purpose of environmental taxes is “to get the prices right.” Emissions taxes signal the scarcity of environmental resources to their users and thus help to internalize negative environmental ...
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The main purpose of environmental taxes is “to get the prices right.” Emissions taxes signal the scarcity of environmental resources to their users and thus help to internalize negative environmental externalities. The idea dates back to 1920 and was taken up by modern environmental economics in the late 1960s; since that time environmental economists have tried to persuade politicians to introduce this incentive-compatible instrument as an efficiency-enhancing substitute of the still predominant command and control approach. However, environmental taxes are still the exception rather than the rule in environmental regulation. This has led economists to search for other arguments in favor of the introduction of environmental taxes. Are there additional dividends to be gained from an environmental tax reform? This chapter looks at the link between unemployment and environmental tax reforms, focusing on an open economy endowed with fixed quantities of labor and capital. After describing a basic model of interjurisdictional competition, the chapter discusses a revenue-neutral environmental tax reform and considers its welfare and employment effects. It then looks at optimal environmental policies in first-best and second-best situations.Less
The main purpose of environmental taxes is “to get the prices right.” Emissions taxes signal the scarcity of environmental resources to their users and thus help to internalize negative environmental externalities. The idea dates back to 1920 and was taken up by modern environmental economics in the late 1960s; since that time environmental economists have tried to persuade politicians to introduce this incentive-compatible instrument as an efficiency-enhancing substitute of the still predominant command and control approach. However, environmental taxes are still the exception rather than the rule in environmental regulation. This has led economists to search for other arguments in favor of the introduction of environmental taxes. Are there additional dividends to be gained from an environmental tax reform? This chapter looks at the link between unemployment and environmental tax reforms, focusing on an open economy endowed with fixed quantities of labor and capital. After describing a basic model of interjurisdictional competition, the chapter discusses a revenue-neutral environmental tax reform and considers its welfare and employment effects. It then looks at optimal environmental policies in first-best and second-best situations.
Don Fullerton, Inkee Hong, and Gilbert E. Metcalf
- Published in print:
- 2000
- Published Online:
- February 2013
- ISBN:
- 9780226094816
- eISBN:
- 9780226094809
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226094809.003.0002
- Subject:
- Economics and Finance, Development, Growth, and Environmental
A tax per unit of pollution can induce all the cheapest and most efficient forms of pollution abatement. To reduce its tax liability, the firm can switch to a less-polluting fuel, add a scrubber, ...
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A tax per unit of pollution can induce all the cheapest and most efficient forms of pollution abatement. To reduce its tax liability, the firm can switch to a less-polluting fuel, add a scrubber, change disposal methods, or otherwise adjust its production process. These methods of substitution in production reduce the pollution per unit of output. In addition, the tax raises the overall cost of production, so the higher equilibrium output price chokes off demand for the output. Thus the tax has a substitution effect that reduces pollution per unit, and an output effect that reduces the number of units. Yet few actual taxes are targeted directly on pollution. This chapter examines the welfare effect of improperly targeted instruments using a simple analytical general equilibrium model with substitution in production and demand by consumers. It derives second-best optimal tax rates on emissions or on output that are based on preference parameters, technological parameters, and preexisting tax rates. It also reviews actual environmental taxes around the world and describes the extent to which they miss the target.Less
A tax per unit of pollution can induce all the cheapest and most efficient forms of pollution abatement. To reduce its tax liability, the firm can switch to a less-polluting fuel, add a scrubber, change disposal methods, or otherwise adjust its production process. These methods of substitution in production reduce the pollution per unit of output. In addition, the tax raises the overall cost of production, so the higher equilibrium output price chokes off demand for the output. Thus the tax has a substitution effect that reduces pollution per unit, and an output effect that reduces the number of units. Yet few actual taxes are targeted directly on pollution. This chapter examines the welfare effect of improperly targeted instruments using a simple analytical general equilibrium model with substitution in production and demand by consumers. It derives second-best optimal tax rates on emissions or on output that are based on preference parameters, technological parameters, and preexisting tax rates. It also reviews actual environmental taxes around the world and describes the extent to which they miss the target.
Roberton C. Williams
- Published in print:
- 2017
- Published Online:
- March 2017
- ISBN:
- 9780190619725
- eISBN:
- 9780190619756
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780190619725.003.0004
- Subject:
- Economics and Finance, Public and Welfare
This chapter examines potential environmental tax policy reforms. It focuses primarily on a carbon tax but also more briefly considers a range of other possible changes and green taxes. These include ...
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This chapter examines potential environmental tax policy reforms. It focuses primarily on a carbon tax but also more briefly considers a range of other possible changes and green taxes. These include revising or eliminating various energy and environmental tax credits and deductions (many of which might become unnecessary in the presence of a carbon tax), as well as changes to energy taxes that have substantial environmental implications (such as the federal gasoline tax). The chapter draws on recent theoretical and empirical research to evaluate the effects of such reforms on tax revenue, pollution emissions pricing, economic efficiency, and income distribution.Less
This chapter examines potential environmental tax policy reforms. It focuses primarily on a carbon tax but also more briefly considers a range of other possible changes and green taxes. These include revising or eliminating various energy and environmental tax credits and deductions (many of which might become unnecessary in the presence of a carbon tax), as well as changes to energy taxes that have substantial environmental implications (such as the federal gasoline tax). The chapter draws on recent theoretical and empirical research to evaluate the effects of such reforms on tax revenue, pollution emissions pricing, economic efficiency, and income distribution.
Pranab Bardhan and Christopher Udry
- Published in print:
- 1999
- Published Online:
- November 2003
- ISBN:
- 9780198773719
- eISBN:
- 9780191595929
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198773714.003.0013
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Begins with a note on the two‐way relationship between poverty and the environment and on the U‐shaped curve relating economic development and environmental quality. The next section elucidates the ...
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Begins with a note on the two‐way relationship between poverty and the environment and on the U‐shaped curve relating economic development and environmental quality. The next section elucidates the problem of overexploitation of natural resources that arises from an institutional failure to cope with the externalities involved. The conventional prescription is the establishment of well‐defined property rights, and so next the problems involved in its implementation through privatization or nationalization are discussed. Then, the scope for community‐level environmental management through cooperation based on incentives and penalties is analyzed, with the focus on game theoretic models of repeated Prisoners’ Dilemma and assurance games. The last section studies the relationship between trade and pollution in a model with endogenous environmental taxes.Less
Begins with a note on the two‐way relationship between poverty and the environment and on the U‐shaped curve relating economic development and environmental quality. The next section elucidates the problem of overexploitation of natural resources that arises from an institutional failure to cope with the externalities involved. The conventional prescription is the establishment of well‐defined property rights, and so next the problems involved in its implementation through privatization or nationalization are discussed. Then, the scope for community‐level environmental management through cooperation based on incentives and penalties is analyzed, with the focus on game theoretic models of repeated Prisoners’ Dilemma and assurance games. The last section studies the relationship between trade and pollution in a model with endogenous environmental taxes.
Andrea Kollmann and Johannes Reichl
- Published in print:
- 2015
- Published Online:
- January 2016
- ISBN:
- 9780262029247
- eISBN:
- 9780262329736
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262029247.003.0004
- Subject:
- Political Science, Environmental Politics
In implementing the most efficient instruments in environmental policy, gaining electoral support is essential. One factor influencing this support is people’s trust in their governments. ...
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In implementing the most efficient instruments in environmental policy, gaining electoral support is essential. One factor influencing this support is people’s trust in their governments. Quantitative analysis suggests that the lower the trust is that people have in their governments, the lower is their willingness to pay for environmental protection. Using survey data of 45,000 individuals in 32 countries, this study shows that political trust is indeed an influencing factor. In our model the predicted probability of accepting new environmental taxes is 17%, the probability to be indifferent is 21%, and the probability of not accepting environmental taxes is 62%. We show that if the average survey participant theoretically had Swiss trust levels, acceptance would increase from 17% to 23%. Considering that all other variables are held constant, the gain in acceptance of environmental taxes by an increase in trust in government is significant.Less
In implementing the most efficient instruments in environmental policy, gaining electoral support is essential. One factor influencing this support is people’s trust in their governments. Quantitative analysis suggests that the lower the trust is that people have in their governments, the lower is their willingness to pay for environmental protection. Using survey data of 45,000 individuals in 32 countries, this study shows that political trust is indeed an influencing factor. In our model the predicted probability of accepting new environmental taxes is 17%, the probability to be indifferent is 21%, and the probability of not accepting environmental taxes is 62%. We show that if the average survey participant theoretically had Swiss trust levels, acceptance would increase from 17% to 23%. Considering that all other variables are held constant, the gain in acceptance of environmental taxes by an increase in trust in government is significant.
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.
Carlo Carraro and Gilbert E. Metcalf
- Published in print:
- 2000
- Published Online:
- February 2013
- ISBN:
- 9780226094816
- eISBN:
- 9780226094809
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226094809.003.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
In recent years, environmental policymakers have adopted a set of instruments quite different from those usually prescribed in environmental policy textbooks. Economists have traditionally encouraged ...
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In recent years, environmental policymakers have adopted a set of instruments quite different from those usually prescribed in environmental policy textbooks. Economists have traditionally encouraged the use of incentive-based instruments in place of command and control regulation. This book explores the economic incentives provided by environmental policy, their effects on a firm's strategy, and their distribution across sectors. It discusses issues that arise in the design and implementation of environmental taxes or other market-based instruments, compliance costs, and environmental policy design when trade and development issues are considered, along with incentives, information, and research and development as they affect optimal policy design. The book looks at CO2 abatement policies, carbon taxation, air quality regulation, the link between unemployment and environmental tax reforms, the environmental regime in developing countries, environmental policy and firm behavior, and the effects of environmental policy on the performance of environmental research joint ventures.Less
In recent years, environmental policymakers have adopted a set of instruments quite different from those usually prescribed in environmental policy textbooks. Economists have traditionally encouraged the use of incentive-based instruments in place of command and control regulation. This book explores the economic incentives provided by environmental policy, their effects on a firm's strategy, and their distribution across sectors. It discusses issues that arise in the design and implementation of environmental taxes or other market-based instruments, compliance costs, and environmental policy design when trade and development issues are considered, along with incentives, information, and research and development as they affect optimal policy design. The book looks at CO2 abatement policies, carbon taxation, air quality regulation, the link between unemployment and environmental tax reforms, the environmental regime in developing countries, environmental policy and firm behavior, and the effects of environmental policy on the performance of environmental research joint ventures.
Terry Barker, Christian Lutz, Bernd Meyer, and Hector Pollitt
- Published in print:
- 2011
- Published Online:
- May 2011
- ISBN:
- 9780199584505
- eISBN:
- 9780191725012
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199584505.003.0008
- Subject:
- Economics and Finance, Macro- and Monetary Economics
The chapter describes the main modelling tools, E3ME and GINFORS, which were used to provide a quantitative analysis of the effects of ETR, and sets out the models’ underlying assumptions and ...
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The chapter describes the main modelling tools, E3ME and GINFORS, which were used to provide a quantitative analysis of the effects of ETR, and sets out the models’ underlying assumptions and simplifications that play a large role in determining the magnitude and direction of the models’ results. The chapter also identifies areas in which the models’ results are likely to differ, particularly with regard to the intended impacts of ETR, and considers how the treatment of revenues from environmental taxes and charges affects the results of modelling ETRs. The detailed application of the models to ETR is then described, outlining the lines of causality between such variables as energy prices, energy demand, output of different industrial sectors, real incomes, and household expenditure, without quantifying the results, but identifying the likely direction of the different impacts and potential indirect effects.Less
The chapter describes the main modelling tools, E3ME and GINFORS, which were used to provide a quantitative analysis of the effects of ETR, and sets out the models’ underlying assumptions and simplifications that play a large role in determining the magnitude and direction of the models’ results. The chapter also identifies areas in which the models’ results are likely to differ, particularly with regard to the intended impacts of ETR, and considers how the treatment of revenues from environmental taxes and charges affects the results of modelling ETRs. The detailed application of the models to ETR is then described, outlining the lines of causality between such variables as energy prices, energy demand, output of different industrial sectors, real incomes, and household expenditure, without quantifying the results, but identifying the likely direction of the different impacts and potential indirect effects.
