Why Tax Energy? Towards a More Rational Energy Policy
AbstractThe same fuels are taxed at widely different rates in different countries while different fuels are taxed at widely different rates within and across countries. Coal, oil and gas are all used to generate electricity, but are subject to very different tax or subsidy regimes. This paper considers what tax theory has to say about efficient energy tax design. The main factors for energy taxes are the optimal tariff argument, the need to correct externalities such as global warming, and second-best considerations for taxing transport fuels as road charges, but these are inadequate to explain current energy taxes. EU energy tax harmonisation and Kyoto suggest that the time is ripe to reform energy taxation.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0508.
Date of creation: Jan 2005
Date of revision:
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tax; energy; oil; optimal tariff; externalities; exhaustible resources; global warming; road charges;
Find related papers by JEL classification:
- Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Systems - - - Government Pricing and Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-01 (All new papers)
- NEP-ENE-2005-02-01 (Energy Economics)
- NEP-ENV-2005-02-01 (Environmental Economics)
- NEP-GEO-2005-02-01 (Economic Geography)
- NEP-PBE-2005-02-01 (Public Economics)
- NEP-RES-2005-02-01 (Resource Economics)
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