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The Production and Consumption Accounting Principles as a Guideline for Designing Environmental Tax Policy

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  • Serrano, Monica

Abstract

This paper evaluates two alternative tax policies aimed at reducing atmospheric pollutant emissions. One based upon an environmental tax that burdens directly firms' emissions, and the other one that burdens both directly and indirectly household consumption's emissions. Applying input-output approach, we reallocate the emissions generated in the economy according to the responsibility definition, i.e. the production or the consumption accounting principle. Afterwards, we analyse the effects on the products' prices of implementing an ad-quantum environmental tax based on the Producer Pays Principle (PPP) and/or on the User Pays Principle (UPP). The results obtained, show that both PPP and UPP environmental tax have the same effect on the final products' prices. However, the price of the intermediate products is only affected by the PPP environmental tax, whereas the UPP environmental tax keeps the prices unchanged.

Suggested Citation

  • Serrano, Monica, 2007. "The Production and Consumption Accounting Principles as a Guideline for Designing Environmental Tax Policy," Climate Change Modelling and Policy Working Papers 12032, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcc:12032
    DOI: 10.22004/ag.econ.12032
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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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