Fuel Exemptions, Revenue Recycling, Equity and Efficiency: Evaluating Post-Kyoto Policies for Switzerland
The Swiss CO2 law runs out in 2012, together with the first commitment period of the Kyoto Protocol. Currently, the Swiss parliament is deciding on the successor of the law that aims to achieve a 20% reduction of CO2 emissions below 1990 levels by 2020. As a means to achieve this ambitious target, the current tax on stationary fuels at 36 CHF/t CO2 will be maintained, while transportation fuels will still be exempted from the carbon tax. Currently, the tax revenues are fully redistributed as a per-capita lump-sum payment via mandatory health insurance and to the employers proportional to their wage payments. This recycling scheme is likely to be prolonged. However, in the presence of the actual debate on the revision of the CO2 law, this paper reexamines the exemption of transportation fuels and the revenue recycling scheme under two points of view. First, I examine the effects on cost-effectiveness and second, I study their impact on equity. Using a static computable general equilibrium model of the Swiss economy incorporating 14 household groups, I find that tax exemptions increase the economy-wide costs of a carbon tax, yet fail to ease the effect on over-proportionally affected households. However, adjusting CO2 tax rates to correct for pre-existing fuel taxes that do not internalize any external effects may decrease the economy-wide cost of a green tax reform. On the other hand the choice of the recycling scheme has less of an effect on efficiency, but its impact on the distributional outcome of the tax reform has to be considered. Choosing an optimal, economy-wide tax will decrease overall costs considerably, while a lump-sum per-capita rebate will result in a progressive tax package at reasonable costs.
Volume (Year): 148 (2012)
Issue (Month): II (June)
|Contact details of provider:|| Postal: |
Phone: +41 (0)44 631 32 34
Fax: +41 (0)44 631 39 01
Web page: http://www.sjes.ch
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bohringer, Christoph & Rutherford, Thomas F., 1997. "Carbon Taxes with Exemptions in an Open Economy: A General Equilibrium Analysis of the German Tax Initiative," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 189-203, February.
- Jan Imhof, 2011. "Subsidies, Standards and Energy Efficiency," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
- Corbett A. Grainger & Charles D. Kolstad, 2009.
"Who Pays a Price on Carbon?,"
NBER Working Papers
15239, National Bureau of Economic Research, Inc.
- Erwin L. Corong, 2008. "Tariff Reduction, Carbon Emissions and Poverty: An Economy-Wide Assessment for the Philippines," EEPSEA Research Report rr2008012, Economy and Environment Program for Southeast Asia (EEPSEA), revised Jan 2008.
- Jan van Heerden & Reyer Gerlagh & James Blignaut & Mark Horridge & Sebastiaan Hess & Ramos Mabugu & Margaret Mabugu, 2006. "Searching for Triple Dividends in South Africa: Fighting CO2 Pollution and Poverty while Promoting Growth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 113-142.
- Wier, Mette & Birr-Pedersen, Katja & Jacobsen, Henrik Klinge & Klok, Jacob, 2005. "Are CO2 taxes regressive? Evidence from the Danish experience," Ecological Economics, Elsevier, vol. 52(2), pages 239-251, January.
- Arief Anshory Yusuf & Budy P. Resosudarmo, 2007. "On the Distributional Effect of Carbon Tax in Developing Countries: The Case of Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 200705, Department of Economics, Padjadjaran University, revised Aug 2007.
- Wiepke Wissema & Rob Dellink, 2010. "AGE assessment of interactions between climate change policy instruments and pre-existing taxes: the case of Ireland," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 10(1/2), pages 46-62.
When requesting a correction, please mention this item's handle: RePEc:ses:arsjes:2012-ii-5. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Steiner)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.