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The Impact of a Carbon Tax on Economic Growth and Carbon Dioxide Emissions in Ireland

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Author Info
Thomas Conefrey () (Economic and Social Research Institute (ESRI))
John Fitz Gerald () (Economic and Social Research Institute (ESRI))
Laura Malaguzzi Valeri () (Economic and Social Research Institute (ESRI))
Richard S. J. Tol () (Economic and Social Research Institute (ESRI))

Additional information is available for the following registered author(s):

Abstract

This paper analyses the medium-term effects of a carbon tax on growth and CO2 emissions in Ireland, a small open economy. We find that a double dividend exists if the carbon tax revenue is recycled through reduced income taxes. If the revenue is recycled by giving a lump-sum transfer to households, a double dividend is unlikely. We also determine that a greater incidence of the carbon tax falls on capital than on labour. When combined with a decrease in income tax, there is a clear shift of the tax burden from labour to capital. Finally, most of the effect on the economy is due to changes in the competitiveness of the manufacturing and market services sectors. These results hold even if we allow changes in energy prices to have an enhanced (detrimental) effect on Ireland's competitiveness.

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File URL: http://www.esri.ie/UserFiles/publications/20080821092420/WP251.pdf
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Publisher Info
Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP251.

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Length: 43 pages
Date of creation: Aug 2008
Date of revision:
Handle: RePEc:esr:wpaper:wp251

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Related research
Keywords: carbon tax; Ireland; double dividend; tax incidence;

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Find related papers by JEL classification:
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Legge, Thomas & Scott, Susan, 2009. "Policy Options to Reduce Ireland's GHG Emissions [Instrument choice: the pros and cons of alternative policy instruments]," Papers WP284, Economic and Social Research Institute (ESRI). [Downloadable!]
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