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Double Dividend Environmental Taxation and Canadian Carbon Emissions Control

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  • Ross McKitrick

Abstract

The possibility of using revenues from environmental taxes to reduce other distortions in the tax system (the so-called double dividend approach) has been discussed recently. This paper reviews the current debate and presents empirical evidence to suggest that the double dividend approach can significantly reduce the cost of CO2 emissions control in Canada and possibly eliminate aggregate welfare and output reductions due to implementation of a carbon tax.

Suggested Citation

  • Ross McKitrick, 1997. "Double Dividend Environmental Taxation and Canadian Carbon Emissions Control," Canadian Public Policy, University of Toronto Press, vol. 23(4), pages 417-438, December.
  • Handle: RePEc:cpp:issued:v:23:y:1997:i:4:p:417-438
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    References listed on IDEAS

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    1. Ross McKitrick, 1997. "Double Dividend Environmental Taxation and Canadian Carbon Emissions Control," Canadian Public Policy, University of Toronto Press, vol. 23(4), pages 417-438, December.
    2. Lawrence H. Goulder, 1994. "Environmental Taxation and the "Double Dividend:" A Reader's Guide," NBER Working Papers 4896, National Bureau of Economic Research, Inc.
    3. Anwar Shah & Bjorn Larsen, 2014. "Carbon taxes, the greenhouse effect, and developing countries," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 353-402, May.
    4. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, vol. 84(4), pages 1085-1089, September.
    5. Fullerton, Don, 1997. "Environmental Levies and Distortionary Taxes: Comment," American Economic Review, American Economic Association, vol. 87(1), pages 245-251, March.
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    7. Browning, Edgar K, 1987. "On the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 77(1), pages 11-23, March.
    8. W. Erwin Diewert & Denis A. Lawrence, 1996. "The Deadweight Costs of Taxation in New Zealand," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 658-673, April.
    9. Barker, Terry & Baylis, Susan & Madsen, Peter, 1993. "A UK carbon/energy tax : The macroeconomics effects," Energy Policy, Elsevier, vol. 21(3), pages 296-308, March.
    10. Bovenberg, A Lans & de Mooij, Ruud A, 1997. "Environmental Levies and Distortionary Taxation: Reply," American Economic Review, American Economic Association, vol. 87(1), pages 252-253, March.
    11. Lee, Dwight R. & Misiolek, Walter S., 1986. "Substituting pollution taxation for general taxation: Some implications for efficiency in pollutions taxation," Journal of Environmental Economics and Management, Elsevier, vol. 13(4), pages 338-347, December.
    12. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, December.
    13. Jaccard, Mark & Montgomery, W David, 1996. "Costs of reducing greenhouse gas emissions in the USA and Canada," Energy Policy, Elsevier, vol. 24(10-11), pages 889-898.
    14. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, August.
    15. Parry Ian W. H., 1995. "Pollution Taxes and Revenue Recycling," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 64-77, November.
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    Cited by:

    1. Brian R. Copeland & M. Scott Taylor, 2017. "Environmental and resource economics: A Canadian retrospective," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1381-1413, December.
    2. Bor, Yunchang Jeffrey & Huang, Yophy, 2010. "Energy taxation and the double dividend effect in Taiwan's energy conservation policy--an empirical study using a computable general equilibrium model," Energy Policy, Elsevier, vol. 38(5), pages 2086-2100, May.
    3. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 145-190, March.
    4. Creedy, John & Sleeman, Catherine, 2006. "Carbon taxation, prices and welfare in New Zealand," Ecological Economics, Elsevier, vol. 57(3), pages 333-345, May.
    5. Jaume Freire-González & Mun S. Ho, 2018. "Environmental Fiscal Reform and the Double Dividend: Evidence from a Dynamic General Equilibrium Model," Sustainability, MDPI, Open Access Journal, vol. 10(2), pages 1-18, February.
    6. Ross McKitrick, 1997. "Double Dividend Environmental Taxation and Canadian Carbon Emissions Control," Canadian Public Policy, University of Toronto Press, vol. 23(4), pages 417-438, December.
    7. Freire-González, Jaume, 2018. "Environmental taxation and the double dividend hypothesis in CGE modelling literature: A critical review," Journal of Policy Modeling, Elsevier, vol. 40(1), pages 194-223.
    8. Érick Lachapelle & Jacques Papy & Pierre-Olivier Pineau & Hélène Trudeau, 2017. "Enquête sur les entreprises touchées par le système de plafonnement et d'échange de droits d'émission de gaz à effet de serre au Québec (SPEDE)," CIRANO Burgundy Reports 2017rb-01, CIRANO.
    9. Brian R. Copeland & M. Scott Taylor, 2017. "Environmental and resource economics: A Canadian retrospective," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1381-1413, December.
    10. Chun-Chiang Feng & Kuei-Feng Chang & Jin-Xu Lin & Shih-Mo Lin, 2020. "The Distributional Effect of A Carbon Tax on Income in Taiwan," Sustainability, MDPI, Open Access Journal, vol. 12(4), pages 1-17, February.

    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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