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Optimal Environmental Taxes Due to Health Effect


  • Haradhan Kumar Mohajan

    () (Premier University, Chittagong, Bangladesh)


This paper shows that the optimal environmental tax should be less than the marginal environmental damages; since the presence of pre-existing distortionary taxes, increasing the welfare costs is associated with the overall tax code. The reduction of pollution causes the benefits of health by supplying maximum labors to create benefit-side tax interactions, which will tend to reduce the optimal environmental taxes. The paper also shows that the existence of social security system preserves the gross wage of labors during sick days and grants subsidies to medical treatments. An attempt is made to confirm that health effects labor supply, which results in an additional impact, the benefit-side tax-interaction effect.

Suggested Citation

  • Haradhan Kumar Mohajan, 2011. "Optimal Environmental Taxes Due to Health Effect," KASBIT Business Journals, Khadim Ali Shah Bukhari Institute of Technology (KASBIT), vol. 4, pages 1-19, December.
  • Handle: RePEc:ksb:journl:v:4:y:2011:p:1-19

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    References listed on IDEAS

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    Cited by:

    1. Mohajan, Haradhan, 2011. "Air pollution causes health effects and net national product of a country decreases: a theoretical framework," MPRA Paper 50858, University Library of Munich, Germany, revised 23 May 2012.
    2. Mohajan, Haradhan, 2011. "Valuing health impacts of the workers in Bangladesh due to air pollution," MPRA Paper 50697, University Library of Munich, Germany, revised 13 May 2011.
    3. Mohajan, Haradhan, 2012. "Certainty and Uncertainty in Cap and Trade System or in Carbon Tax for Green Accounting to Decrease Greenhouse gas Emissions," MPRA Paper 50669, University Library of Munich, Germany, revised 20 Dec 2012.

    More about this item


    Environmental Pollution; Optimal Environmental Taxes; Public Good; Budget Constraints;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law


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