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Using revenue from an energy tax to finance social security: a dynamic general equilibrium model for Switzerland

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  • Stefan Felder, Renger van Nieuwkoop

Abstract

A substantial increase in the dependency ratio due to both population ageing and low economic growth will put pressure on social security systems. This paper analyses an ecological tax reform that uses revenues from an energy tax to finance reductions in either the wage or the value added tax. The simulation results based on a dynamic general equilibrium model for Switzerland show that increasing energy prices by 50% or 100% will substantially lower energy use, while decreasing the efficiency of the fiscal system only slightly. Furthermore, it turns out that the effects do not differ when an increase in the VAT substitutes part of the social security payroll tax.

Suggested Citation

  • Stefan Felder, Renger van Nieuwkoop, 2000. "Using revenue from an energy tax to finance social security: a dynamic general equilibrium model for Switzerland," International Journal of Sustainable Development, Inderscience Enterprises Ltd, vol. 3(2), pages 136-145.
  • Handle: RePEc:ids:ijsusd:v:3:y:2000:i:2:p:136-145
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