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Why Green Taxation?

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  • Lene Hjøllund
  • Gert Tinggaard Svendsen

Abstract

According to economists, solving environmental problems is simple. Politicians should simply impose a uniform tax on harmful emissions. However, the actual design of such green taxation shows that politicians do not follow their advice. CO 2 taxation in OECD, for example, is highly differentiated and greatly favours industry. In fact, CO 2 tax rates for industry are, on average, six times lower than those for households. We argue that the reason for this tax differentiation is that industry, in contrast to households, has a strong capability to lobby. Therefore, green taxation is effectively blocked and the desired environmental results are not being achieved. Why then is green taxation persistently applied in relation to industry? We argue that strong fiscal incentives drive this policy choice at the expense of environmental concerns because this allows environmental bureaucracies to maximize budgets.

Suggested Citation

  • Lene Hjøllund & Gert Tinggaard Svendsen, 2001. "Why Green Taxation?," Energy & Environment, , vol. 12(1), pages 29-38, January.
    • Handle: RePEc:sae:engenv:v:12:y:2001:i:1:p:29-38
    DOI: 10.1260/0958305011500571
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    References listed on IDEAS

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    1. Lee, Dwight R. & Misiolek, Walter S., 1986. "Substituting pollution taxation for general taxation: Some implications for efficiency in pollutions taxation," Journal of Environmental Economics and Management, Elsevier, vol. 13(4), pages 338-347, December.
    2. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249.
    3. Gert T. Svendsen, 1998. "public choice and environmental regulation," Books, Edward Elgar Publishing, number 1298.
    4. N Hanley & S Hallett & I Moffatt, 1990. "Research Policy and Review 33. Why is More Notice not Taken of Economists' Prescriptions for the Control of Pollution?," Environment and Planning A, , vol. 22(11), pages 1421-1439, November.
    5. Carsten Daugbjerg & Gert Tinggaard Svendsen, 2001. "Green Taxation in Question," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59553-8, September.
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    Cited by:

    1. Henrik Christoffersen & Gert Tinggaard Svendsen, 2002. "Bureaucratic Tax-Seeking: The Danish Waste Tax," Energy & Environment, , vol. 13(3), pages 355-366, July.

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