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Gradual green tax reforms

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  • de Miguel, Carlos
  • Manzano, Baltasar

Abstract

Green tax reforms have become an important tool not only in protecting the environment but also in bringing about a more efficient tax system. However, reforms often imply accepting sacrifices in the short-run and bring about the risk of potential political opposition. Within this framework, the debate on whether to implement green tax reforms in one-step or gradually becomes of great interest. In this paper, we use a dynamic general equilibrium model, calibrated to the Spanish economy, to evaluate different reforms that consist in increasing energy taxes and adjusting capital taxation in a revenue-neutral framework. Our findings show that, although an environmental dividend is always granted, the existence of an efficiency dividend depends on the type of reform, its size and how gradually it is implemented. Thus, one-step reforms that produce an efficiency dividend would imply large efficiency costs in the short-run. In this case, the reform could only produce efficiency gains in the short-run if it is implemented gradually, although such gains would end up disappearing in the long-run.

Suggested Citation

  • de Miguel, Carlos & Manzano, Baltasar, 2011. "Gradual green tax reforms," Energy Economics, Elsevier, vol. 33(S1), pages 50-58.
  • Handle: RePEc:eee:eneeco:v:33:y:2011:i:s1:p:s50-s58
    DOI: 10.1016/j.eneco.2011.07.026
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    Cited by:

    1. Tumen, Semih & Unalmis, Deren & Unalmis, Ibrahim & Unsal, D. Filiz, 2016. "Taxing fossil fuels under speculative storage," Energy Economics, Elsevier, vol. 53(C), pages 64-75.
    2. repec:gam:jsusta:v:10:y:2018:i:2:p:501-:d:131774 is not listed on IDEAS
    3. Markandya, Anil & González-Eguino, Mikel & Escapa, Marta, 2013. "From shadow to green: Linking environmental fiscal reforms and the informal economy," Energy Economics, Elsevier, vol. 40(S1), pages 108-118.
    4. Shkarlet, Serhiy & Petrakov, Iaroslav, 2013. "Environmental Taxation Evolution in Ukraine: Trends, Challenges and Outlook," MPRA Paper 45168, University Library of Munich, Germany, revised 18 May 2013.
    5. Baltasar Manzano & Luis Rey, 2012. "The Welfare Cost of Energy Insecurity," Working Papers fa07-2012, Economics for Energy.
    6. repec:gam:jsusta:v:8:y:2016:i:4:p:373:d:68303 is not listed on IDEAS
    7. Tomas Ekvall & Martin Hirschnitz-Garbers & Fabio Eboli & Aleksander Śniegocki, 2016. "A Systemic and Systematic Approach to the Development of a Policy Mix for Material Resource Efficiency," Sustainability, MDPI, Open Access Journal, vol. 8(4), pages 1-26, April.

    More about this item

    Keywords

    Green tax reform; General equilibrium;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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