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Tax Revenue-Financed Public Abatement and Welfare: A Consumption Tax Case

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  • Takumi HAIBARA

Abstract

This paper develops a model of public abatement earmarked by either a pollution tax or a consumption tax and shows that consumption tax revenue-financed public abatement is superior to pollution tax revenue-financed public abatement in terms of welfare when the pollution tax rate rises. It implies that the optimal pollution tax rate is higher under consumption tax revenue-financed public abatement than it is under pollution tax revenue-financed public abatement. These results are policy oriented that policy makers of environmental protection are worth considering.

Suggested Citation

  • Takumi HAIBARA, 2006. "Tax Revenue-Financed Public Abatement and Welfare: A Consumption Tax Case," GSICS Working Paper Series 12, Graduate School of International Cooperation Studies, Kobe University.
    • Handle: RePEc:kcs:wpaper:12
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    File URL: http://www.research.kobe-u.ac.jp/gsics-publication/gwps/2006-12.pdf
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    3. Bovenberg, A Lans & van der Ploeg, Frederick, 1993. "Green Policies in a Small Open Economy," CEPR Discussion Papers 785, C.E.P.R. Discussion Papers.
    4. Takumi Haibara, 2006. "Trade Liberalization, Public Abatement, And Welfare," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 18(1), pages 11-24, March.
    5. Copeland Brian R., 1994. "International Trade and the Environment: Policy Reform in a Polluted Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 44-65, January.
    6. Abe, Kenzo, 1992. "Tariff Reform in a Small Open Economy with Public Production," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 209-222, February.
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