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From Regressive Pollution Taxes to Progressive Environmental Tax Reforms

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  • Mireille Chiroleu-Assouline

    ()
    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Mouez Fodha

    ()
    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, LEO - Université d'Orléans)

Abstract

European countries have increased their use of environmental tax instruments by designing new tax bases. But, many countries have to face the opposition of the public opinion, for fear of the distributive consequences of these environmental tax reforms. This paper sheds light on the distributive consequences of environmental tax policies when households are heterogeneous. The objective is to assess whether an environmental tax reform could be Pareto improving, when the revenue of the pollution tax is recycled by a change in the labor tax properties. We show that, whatever the degree of regressivity of the environmental tax alone, it is possible to design a recycling mechanism that renders the tax reform Pareto improving, by simultaneously decreasing the average rate of the wage tax and increasing its progressivity.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00719762.

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Date of creation: Jul 2012
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Handle: RePEc:hal:cesptp:halshs-00719762

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Keywords: Environmental tax reform; heterogeneity; welfare analysis; tax progressivity;

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References

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  1. Bureau, Benjamin, 2011. "Distributional effects of a carbon tax on car fuels in France," Energy Economics, Elsevier, vol. 33(1), pages 121-130, January.
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  5. Mireille Chiroleu-Assouline & Mouez Fodha, 2008. "Environmental Tax and the Distribution of Income among Heterogeneous Workers," Documents de travail du Centre d'Economie de la Sorbonne v08097, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Nov 2009.
  6. Mireille Chiroleu-Assouline & Mouez Fodha, 2006. "Double Dividend Hypothesis, Golden Rule and Welfare Distribution," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00089895, HAL.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. On the distributional effect of environmental taxes
    by Economic Logician in Economic Logic on 2012-09-10 14:27:00
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Cited by:
  1. Mouez Fodha & Thomas Seegmuller & Hiroaki Yamagami, 2014. "Environmental Policies under Debt Constraint," Working Papers halshs-01023798, HAL.
  2. Mouez Fodha & Thomas Seegmuller & Hiroaki Yamagami, 2014. "Environmental Policies under Debt Constraint," AMSE Working Papers 1431, Aix-Marseille School of Economics, Marseille, France, revised Jun 2014.

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