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Green taxes: Refunding rules and lobbying

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  • Aidt, Toke S.

Abstract

Green taxes can internalize environmental externalities and raise revenues. We develop a positive theory that treats both of these aspects as endogenous outcomes of special-interest and electoral politics. We consider the choice among three (endogenous) refunding rules: income tax cuts, extra public spending and tax burden compensation to polluters. We show that a polluter lobby group may lobby for the ecotax revenue to be refunded to voters rather than to its members. The reason is that the "price" that the lobby group must pay for a reduction in the green tax can be reduced by supporting a refunding rule that pleases voters. Our analysis provides insights into recent green tax reforms in Europe.

Suggested Citation

  • Aidt, Toke S., 2010. "Green taxes: Refunding rules and lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 31-43, July.
  • Handle: RePEc:eee:jeeman:v:60:y:2010:i:1:p:31-43
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    Cited by:

    1. Khezr, Peyman & MacKenzie, Ian A., 2018. "Consignment auctions," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 42-51.
    2. Krumm, Raimund & Volkert, Jürgen, 2015. "Möglichkeiten und Grenzen der politischen Realisierbarkeit intra- und intergenerativer Gerechtigkeit," UFZ Discussion Papers 11/2015, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    3. Alesina, Alberto & Passarelli, Francesco, 2014. "Regulation versus taxation," Journal of Public Economics, Elsevier, vol. 110(C), pages 147-156.
    4. del Río, Pablo & Bleda, Mercedes, 2012. "Comparing the innovation effects of support schemes for renewable electricity technologies: A function of innovation approach," Energy Policy, Elsevier, vol. 50(C), pages 272-282.
    5. Coria, Jessica & Mohlin, Kristina, 2017. "On Refunding of Emission Taxes and Technology Diffusion," Strategic Behavior and the Environment, now publishers, vol. 6(3), pages 205-248, March.
    6. Massimiliano Mazzanti & Roberto Zoboli, 2012. "A Political Economy Approach to Resource Taxation: Weak Sustainability, Revenue Recycling and Regional Planning," Working Papers 201202, University of Ferrara, Department of Economics.
    7. Joschka Gerigk & Ian MacKenzie & Markus Ohndorf, 2015. "A Model of Benchmarking Regulation: Revisiting the Efficiency of Environmental Standards," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(1), pages 59-82, September.
    8. Massimiliano Mazzanti & Antonio Musolesi, 2011. "Income and time related effects in EKC," Working Papers 201105, University of Ferrara, Department of Economics.
    9. Habla, Wolfgang & Roeder, Kerstin, 2017. "The political economy of mitigation and adaptation," European Economic Review, Elsevier, vol. 92(C), pages 239-257.
    10. Thomas Eichner & Rüdiger Pethig, 2015. "Lobbying for and Against Subsidizing Green Energy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 925-947, December.
    11. Joachim Fünfgelt & Günther G. Schulze, 2011. "Endogenous Environmental Policy when Pollution is Transboundary," Working Paper Series in Economics 196, University of Lüneburg, Institute of Economics.
    12. Fünfgelt, Joachim & Schulze, Günther G., 2016. "Endogenous environmental policy for small open economies with transboundary pollution," Economic Modelling, Elsevier, vol. 57(C), pages 294-310.
    13. Bernard, Sophie & Hotte, Louis & Winer, Stanley L., 2014. "Democracy, inequality and the environment when citizens can mitigate health consequences of pollution privately or act collectively," European Journal of Political Economy, Elsevier, vol. 34(C), pages 142-156.
    14. Niels Anger & Emmanuel Asane-Otoo & Christoph Böhringer & Ulrich Oberndorfer, 2016. "Public interest versus interest groups: a political economy analysis of allowance allocation under the EU emissions trading scheme," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(5), pages 621-638, October.
    15. Andrea Kollmann & Friedrich Schneider, 2010. "Why Does Environmental Policy in Representative Democracies Tend to Be Inadequate? A Preliminary Public Choice Analysis," Sustainability, MDPI, Open Access Journal, vol. 2(12), pages 1-25, November.
    16. Toke Aidt & Uk Hwang, 2014. "To Ban or Not to Ban: Foreign Lobbying and Cross National Externalities," Cambridge Working Papers in Economics 1402, Faculty of Economics, University of Cambridge.
    17. Divya Datt & Meeta Keswani Mehra, 2016. "Environmental Policy in a Federation with Special Interest Politics and Inter-Governmental Grants," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(4), pages 575-595, August.
    18. Habla, Wolfgang & Roeder, Kerstin, 2013. "Intergenerational aspects of ecotax reforms – An application to Germany," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 301-318.
    19. MacKenzie, Ian A. & Ohndorf, Markus, 2012. "Cap-and-trade, taxes, and distributional conflict," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 51-65.
    20. Roeder, Kerstin & Habla, Wolfgang, 2012. "The Political Sustainability of Germany's Environmental Tax Rate," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62060, Verein für Socialpolitik / German Economic Association.
    21. Simone Borghesi & Giulio Cainelli & Massimiliano Mazzanti, 2012. "Brown Sunsets and Green Dawns in the Industrial Sector: Environmental Innovations, Firm Behavior and the European Emission Trading," Working Papers 2012.03, Fondazione Eni Enrico Mattei.
    22. repec:kap:pubcho:v:171:y:2017:i:1:d:10.1007_s11127-017-0401-8 is not listed on IDEAS

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