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Simulating the Distributional Effects of a Canadian Carbon Tax

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  • Kirk Hamilton
  • Grant Cameron

Abstract

It is estimated that a tax of roughly $102 per ton of carbon is the level necessary to meet the Rio target for carbon emissions. Cost-push simulations show consumers expenditure to be the category of demand most affected by the tax (prices increase by 2.0-2.4 percent), and commercial transportation the most affected production sector (2.2-2.6 percent). Micro-simulations calculate the average incidence of the tax to range from $552 to $657 per family per year, with moderately regressive results: decreases in consumable income for the lowest income quintile are from 1.1 to 1.2 percent higher than for the highest. Low income married couples are the family type most heavily affected by the tax.

Suggested Citation

  • Kirk Hamilton & Grant Cameron, 1994. "Simulating the Distributional Effects of a Canadian Carbon Tax," Canadian Public Policy, University of Toronto Press, vol. 20(4), pages 385-399, December.
  • Handle: RePEc:cpp:issued:v:20:y:1994:i:4:p:385-399
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    References listed on IDEAS

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    1. Pierre Duguay & Stephen Poloz, 1994. "The Role of Economic Projections in Canadian Monetary Policy Formulation," Canadian Public Policy, University of Toronto Press, vol. 20(2), pages 189-199, June.
    2. Caramazza, Francesco & Hostland, Doug & Poloz, Stephen, 1990. "The demand for money and the monetary policy process in Canada," Journal of Policy Modeling, Elsevier, vol. 12(2), pages 387-426.
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