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Border Tax Adjustments and Tariff-Tax Reforms with Consumption Pollution

Author

Listed:
  • Nikos Tsakiris
  • Panos Hatzipanayotou

    (Athens University of Economics and Business)

  • Michael S. Michael

Abstract

We develop a model of a small open economy, where pollution per unit of consumption between domestically produced and imported quantities of the same good differs. We show that the first-best policy combination calls for consumption taxes on all polluting goods, and Border Tax Adjustment (BTA) measures, i.e., tariffs or import subsidies. We identify conditions under which well known tariff-tax reform policies for developing economies, such as a consumer-price-neutral piecemeal reform of a trade and a consumption tax, and a consumer-price-neutral reform of all trade and consumption taxes improve welfare. We also evaluate whether a consumer-price-neutral reform of a tariff and a consumption tax is superior to a reform of a tariff alone.

Suggested Citation

  • Nikos Tsakiris & Panos Hatzipanayotou & Michael S. Michael, 2018. "Border Tax Adjustments and Tariff-Tax Reforms with Consumption Pollution," DEOS Working Papers 1811, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:1811
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    References listed on IDEAS

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    Cited by:

    1. Yasushi Kawabata & Yasuhiro Takarada, 2023. "Greening Trade Agreements Through Harmonization of Environmental Regulations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(1), pages 57-81, October.
    2. Rabah Amir & Joana Resende & Bernard Sinclair‐Desgagné, 2020. "Introduction to the thematic issue on “Regulation in health, environmental and innovation sectors”," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1740-1745, December.
    3. Haitao Cheng, 2023. "Consumption pollution and taxes with endogenous firm locations and different market sizes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(6), pages 1601-1632, December.
    4. Yasuhiro Takarada & Yasushi Kawabata & Akihiko Yanase & Hiroshi Kurata, 2020. "Standards policy and international trade: Multilateralism versus regionalism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1420-1441, September.
    5. Michael S. Michael & Panos Hatzipanayotou & Nikos Tsakiris, 2023. "Can Small Economies Act Strategically? The Case of Consumption Pollution and Non-tradable Goods," DEOS Working Papers 2312, Athens University of Economics and Business.
    6. Haitao CHENG & ISHIKAWA Jota, 2021. "Carbon Tax and Border Tax Adjustments with Technology and Location Choices," Discussion papers 21030, Research Institute of Economy, Trade and Industry (RIETI).
    7. Fabio Antoniou & Panos Hatzipanayotou & Michael S. Michael & Nikos Tsakiris, 2022. "Tax competition in the presence of environmental spillovers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(3), pages 600-626, June.

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    More about this item

    Keywords

    Consumption generated Pollution; Optimal Taxation; Border Tax Adjustments; Trade and Consumption Tax Reforms;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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