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Economic Impacts of the 1997 EU Energy Tax: Simulations with Three EU-Wide Models

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  • Heinz Jansen
  • Ger Klaassen

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    Abstract

    In March 1997 the European Commission adopted aproposal that increases existing minimum levels oftaxation on mineral oils by around 10 to 25% andintroduces excises for other energy products. Thispaper analyses the macroeconomic impacts of theproposal. It employs three models: HERMES, GEM-E3, andE3ME. All models confirm that the proposal will havepositive macroeconomic impacts when the tax revenuesare used to reduce social security contributions paidby employers. For the EU as a whole, both GDP andemployment are expected to be higher and CO 2emissions are 0.9 to 1.6 percent lower. The positiveEU-wide effects can be observed in practically allmember states. The sector impacts are modest, with theenergy sector expected to face the most negativeimpacts. Differences between model results are due tothe model type (general equilibrium ormacro-econometric), the EU countries covered and theway tax exemptions were handled. Crucial assumptionsto obtain the ``double dividend'' are the modelling ofthe labour market and the impacts on EU externaltrade. The sensitivity of the results for the use oftax revenues, tax exemptions and tax rate increases isassessed. Copyright Kluwer Academic Publishers 2000

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    File URL: http://hdl.handle.net/10.1023/A:1008309512349
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    Bibliographic Info

    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 15 (2000)
    Issue (Month): 2 (February)
    Pages: 179-197

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    Handle: RePEc:kap:enreec:v:15:y:2000:i:2:p:179-197

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    Web page: http://www.springerlink.com/link.asp?id=100263

    Related research

    Keywords: carbon dioxide; double dividend; employment; energy tax; EU; environmental policy;

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    1. Lawrence H. Goulder & Ian W. H. Parry & Dallas Burtraw, 1996. "Revenue-Raising vs. Other Approaches to Environmental Protection: The Critical Significance of Pre-Existing Tax Distortions," NBER Working Papers 5641, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Chen, Shiyi, 2013. "What is the potential impact of a taxation system reform on carbon abatement and industrial growth in China?," Economic Systems, Elsevier, vol. 37(3), pages 369-386.
    2. Olga Kiuila & Anil Markandya, 2009. "Can transition economies implement a carbon tax and hope for a double dividend? The case of Estonia," Applied Economics Letters, Taylor & Francis Journals, vol. 16(7), pages 705-709.
    3. Roberto Patuelli & Eric Pels & Peter Nijkamp, 2002. "Environmental Tax Reform and Double Dividend," Tinbergen Institute Discussion Papers 02-095/3, Tinbergen Institute.
    4. : Eduardo L. Giménez (a) & Miguel Rodríguez, . "Pigou’S Dividend Versus Ramsey’S Dividend In The Double Dividend Literature," Working Papers 2-06 Classification-JEL :, Instituto de Estudios Fiscales.

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