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Differentiation of Green Taxes: A Political-Economy Analysis for Germany

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  • Anger, Niels
  • Böhringer, Christoph
  • Lange, Andreas

Abstract

In this paper we study political-economy determinants of the differentiation of environmental taxes between sectors. Using a common-agency model, we provide predictions on tax differentiation which are then tested using data from the German Ecological Tax Reform. As the reform is revenue neutral and reduces labor costs, tax differentiation is not only determined by the activity of lobby groups favoring reduced tax rates, but also by the groups? interest in revenue rebates to labor. Empirical data underpin our theoretical findings: A regression analysis of Germany?s green tax reform explains environmental tax differentiation by the presence of sectoral interest groups. Besides market concentration and energy demand elasticities, the exposure of industries to international trade flows plays an important role in the environmental tax design. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-03.

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Date of creation: 2006
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Handle: RePEc:zbw:zewdip:4582

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Keywords: environmental tax reform; interest groups; common agency;

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References

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  1. Toke Skovsgaard Aidt, . "On the Political Economy of Green Tax Reforms," Economics Working Papers 1997-20, School of Economics and Management, University of Aarhus.
  2. Eric Nævdal & Richard Brazee, 2000. "A Guide to Extracting Information from Environmental Pressure Groups," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 16(1), pages 105-119, May.
  3. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
  4. Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
  5. Rauscher, Michael, 1994. "On Ecological Dumping," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 822-40, Supplemen.
  6. Bovenberg, A.L. & Ploeg, F. van der, 1996. "Optimal taxation, public goods and environmental policy with involuntary unemployment," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73563, Tilburg University.
  7. Rutherford, Thomas F. & Böhringer, Christoph, 2002. "In Search of a Rationale for Differentiated Environmental Taxes," ZEW Discussion Papers 02-30, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Portney, Paul & Oates, Wallace, 2001. "The Political Economy of Environmental Policy," Discussion Papers dp-01-55, Resources For the Future.
  9. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
  10. Stefan Bach & Michael Kohlhaas & Bernd Meyer & Barbara Praetorius & Heinz Welsch, 2003. "Auswirkungen und Perspektiven der Ökologischen Steuerreform in Deutschland: Eine modellgestützte Analyse-super-," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(2), pages 223-238, 05.
  11. Potters, J.J.M. & Winden, F. van, 1992. "Lobbying and asymmetric information," Open Access publications from Tilburg University urn:nbn:nl:ui:12-223989, Tilburg University.
  12. Stefan Bach, 1997. "Steuerreform in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 66(3-4), pages 291-316.
  13. Richter, Wolfram F. & Schneider, Kerstin, 2003. "Energy taxation: Reasons for discriminating in favor of the production sector," European Economic Review, Elsevier, vol. 47(3), pages 461-476, June.
  14. Fredriksson, Per G., 1997. "The Political Economy of Pollution Taxes in a Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 44-58, May.
  15. Krutilla, Kerry, 1991. "Environmental regulation in an open economy," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 127-142, March.
  16. Bohringer, Christoph & Rutherford, Thomas F., 1997. "Carbon Taxes with Exemptions in an Open Economy: A General Equilibrium Analysis of the German Tax Initiative," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 189-203, February.
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Citations

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Cited by:
  1. Anger, Niels, 2008. "Emissions trading beyond Europe: Linking schemes in a post-Kyoto world," Energy Economics, Elsevier, vol. 30(4), pages 2028-2049, July.
  2. Andrea Kollmann & Friedrich Schneider, 2010. "Why does Environmental Policy in Representative Democracies Tend to be Inadequate? A Preliminary Public Choice Analysis," CESifo Working Paper Series 3223, CESifo Group Munich.
  3. Copeland, Brian R., 2012. "International trade and green growth," Policy Research Working Paper Series 6235, The World Bank.
  4. Anger, Niels & Böhringer, Christoph & Oberndorfer, Ulrich, 2008. "Public Interest vs. Interest Groups: Allowance Allocation in the EU Emissions Trading Scheme," ZEW Discussion Papers 08-023, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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