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Designing an electricity tax system in presence of international regulations and multiple public goals: An empirical assessment

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Author Info
Geir H. Bjertnæs, Taran Fæhn, Jørgen Aasness () (Statistics Norway)
Abstract

The European competition rules restrict governments’ opportunity to differentiate terms of energy accessibility among firms and industries. This easily runs counter with regional and industrial goals of national energy policies. Norway levies a tax on use of electricity, but exempts main industrial usages. This analysis assesses alternative, internationally legal, designs of the system in terms of their effects on efficiency and distribution, including industrial objectives. Among the reforms we explore, removing the exemptions would be the most effective way of raising revenue, but it would be politically costly by deteriorating the competitiveness of today's favoured industries. An entire abolishment of the electricity tax, and replacing revenue by increased VAT, would generate a more equal distribution of standard of living and, at the same time, avoid the trade-off between efficiency and competitiveness.

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 555.

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Date of creation: Sep 2008
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Handle: RePEc:ssb:dispap:555

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Related research
Keywords: Tax reform; Multiple policy goals; Computable general equilibrium model;

Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
F15 - International Economics - - Trade - - - Economic Integration
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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References listed on IDEAS
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. Bowitz, Einar & Cappelen, Adne, 2001. "Modeling income policies: some Norwegian experiences 1973-1993," Economic Modelling, Elsevier, vol. 18(3), pages 349-379, August. [Downloadable!] (restricted)
  2. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March. [Downloadable!] (restricted)
  3. Bjertnæs, Geir H. & Fæhn, Taran, 2008. "Energy taxation in a small, open economy: Social efficiency gains versus industrial concerns," Energy Economics, Elsevier, vol. 30(4), pages 2050-2071, July. [Downloadable!] (restricted)
  4. Geir H. Bjertnæs, 2005. "Avoiding Adverse Employment Effects from Energy Taxation: What does it cost?," Discussion Papers 432, Research Department of Statistics Norway. [Downloadable!]
  5. Lawrence H. Goulder & Roberton C. Williams III, 2003. "The Substantial Bias from Ignoring General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 898-927, August. [Downloadable!] (restricted)
  6. Brita Bye & Karine Nyborg, 2003. "Are Differentiated Carbon Taxes Inefficient? A General Equilibrium Analysis," The Energy Journal, International Association for Energy Economics, vol. 24(2), pages 95-112.
  7. Green, Jerry & Sheshinski, Eytan, 1976. "Direct versus Indirect Remedies for Externalities," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 797-808, August. [Downloadable!] (restricted)
  8. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
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  9. Klette, Tor Jakob, 1999. "Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data," Journal of Industrial Economics, Blackwell Publishing, vol. 47(4), pages 451-76, December. [Downloadable!] (restricted)
    Other versions:
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