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Optimality of Relaxing Revenue-neutral Restrictions in Green Tax Reforms

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  • Eduardo L. Giménez

    (Universidade de Vigo)

  • Miguel Rodríguez

    (Universidade de Vigo)

Abstract

Green Tax Reforms (GTR) have been initially devised as a policy proposal to tackle simultaneously sever¬al political goals. Recent fiscal stress episodes have defied this view. In this paper, we assess a key issue of interest for policymakers: departing from a fiscal system that does not include any environmental tax, would the tax menu resulting from the implementation of revenue-neutral GTR be the closest available to the optimal one? Our work illustrates in a simple, parametrized model that the answer is negative. These findings deviate from general wisdom and provide theoretical support for the third generation of GTR.

Suggested Citation

  • Eduardo L. Giménez & Miguel Rodríguez, 2020. "Optimality of Relaxing Revenue-neutral Restrictions in Green Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 233(2), pages 3-24, June.
    • Handle: RePEc:hpe:journl:y:2020:v:233:i:2:p:3-24
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    Cited by:

    1. Rodríguez, Miguel & Pena-Boquete, Yolanda & Pardo-Fernández, Juan Carlos, 2016. "Revisiting Environmental Kuznets Curves through the energy price lens," Energy Policy, Elsevier, vol. 95(C), pages 32-41.

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    More about this item

    Keywords

    Green tax reforms; revenue neutrality; optimal taxation.;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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