Negative Externality Of Carbon Emission And Its Impact On Income Inequality: A Multidisciplinary Perspective

The negative externality problem, one of the main causes of market failure, has become a problem that requires a multidisciplinary solution, especially with the increasing environmental degradation caused by GHGs in the last century. Environmental degradation stem from carbon emissions to third parties as a consequence of negative externalities is discussed within the framework of the principles of social risk and compensation of sacrifice. In the analysis, variables related to Gini index, CO2 emissions,ratio of indirect taxes to total taxes of Turkiye for the years 1988-2022, were analysed by non-linear time series analysis. Harvey et al. (2007;2008) tests revealed that the series other than the indirect tax series are non-linear. Thus, Fourier stationarity test of Becker et al. (2006) and Fourier ADL test of Banerjee et al. (2017) was applied. According to the FMOLS, each unit of CO2 emissions reduces the Gini index by 0.013 units in the long run. The effect of direct and indirect tax rates on income distribution was found to be insufficient in study. As a social duty of the state, in order to ensure fair distribution, it is necessary to increase the effectiveness of fiscal policies both to encourage environmental innovation and to tax carbon footprint fairly