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Environmental Taxes, International Capital Mobility and Inefficient Tax Systems: Tax Burden vs. Tax Shifting

Author

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  • Ruud A. de Mooij
  • A. Lans Bovenberg

Abstract

This paper deals with the so-called 'double-dividend' of an environmental tax reform. We find that, in a model with only labor and a polluting input as factors of production, society faces a trade-off between internalizing environmental externalities and raising revenues in the least distortionary way. However, if capital enters the production structure, an ecological tax reform may render the tax structure more efficient from a non-environmental point of view, thereby raising not only environmental quality but also private incomes.

Suggested Citation

  • Ruud A. de Mooij & A. Lans Bovenberg, "undated". "Environmental Taxes, International Capital Mobility and Inefficient Tax Systems: Tax Burden vs. Tax Shifting," EPRU Working Paper Series 95-14, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:epruwp:95-14
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    References listed on IDEAS

    as
    1. A. Lans Bovenberg & Frederick van der Ploeg, 2002. "Environmental Policy, Public Finance and the Labour Market in a Second-Best World," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 6, pages 112-153, Edward Elgar Publishing.
    2. Hesse, Dieter M & Tarkka, Helena, 1986. " The Demand for Capital, Labor and Energy in European Manufacturing Industry before and after the Oil Price Shocks," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(3), pages 529-546.
    3. Ian W.H. Parry, 2002. "Pollution Taxes and Revenue Reycling," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 15, pages 235-248, Edward Elgar Publishing.
    4. 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.
    5. Pindyck, Robert S, 1979. "Interfuel Substitution and the Industrial Demand for Energy: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 169-179, May.
    6. Schob, Ronnie, 1996. "Evaluating Tax Reforms in the Presence of Externalities," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 537-555, October.
    7. Lans Bovenberg & Frederick van der Ploeg, 1994. "Consequences of Environmental Tax Reform for Involuntary Unemployment and Welfare," CESifo Working Paper Series 56, CESifo.
    8. Ilmakunnas, Pekka & Torma, Hannu, 1989. " Structural Change in Factor Substitution in Finnish Manufacturing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 91(4), pages 705-721.
    9. Lans Bovenberg, A. & de Mooij, Ruud A., 1994. "Environmental taxes and labor-market distortions," European Journal of Political Economy, Elsevier, vol. 10(4), pages 655-683, December.
    10. Berndt, Ernst R. & Hesse, Dieter M., 1986. "Measuring and assessing capacity utilization in the manufacturing sectors of nine oecd countries," European Economic Review, Elsevier, vol. 30(5), pages 961-989, October.
    11. Pearce, David W, 1991. "The Role of Carbon Taxes in Adjusting to Global Warming," Economic Journal, Royal Economic Society, vol. 101(407), pages 938-948, July.
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