From Regressive Pollution Taxes to Progressive Environmental Tax Reforms
AbstractEuropean 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 annd increasing its progressivity.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 12048.
Length: 26 pages
Date of creation: Jul 2012
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Environmental tax reform; heterogeneity; welfare analysis; tax progressivity.;
Other versions of this item:
- Chiroleu-Assouline, Mireille & Fodha, Mouez, 2014. "From regressive pollution taxes to progressive environmental tax reforms," European Economic Review, Elsevier, vol. 69(C), pages 126-142.
- Mireille Chiroleu-Assouline & Mouez Fodha, 2012. "From Regressive Pollution Taxes to Progressive Environmental Tax Reforms," CEEES Paper Series CE3S-03/12, European University at St. Petersburg, Department of Economics.
- D60 - Microeconomics - - Welfare Economics - - - General
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ACC-2012-07-23 (Accounting & Auditing)
- NEP-ALL-2012-07-23 (All new papers)
- NEP-ENV-2012-07-23 (Environmental Economics)
- NEP-PBE-2012-07-23 (Public Economics)
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