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Local air pollution and global climate change taxes: a distributional analysis

Author

Listed:
  • Xaquín Garcia-Muros
  • Mercedes Burguillo
  • Mikel Gonzalez-Eguino
  • Desiderio Romero-Jordán

Abstract

Local air pollution and global climate change are two significant environmental problems which are interrelated. Some recent papers examine them together, but most of the relevant literature has focused either on climate change alone or on the ancillary benefits of mitigating it (in terms of air pollution). In regard to distribution, most publications have focused on the impacts of climate change-related taxes such as excise duties on CO2, energy or fuels. This paper explores the distributional implications of policies for taxing local air pollution and compares them with climate change taxes. The framework of taxation on air pollution is based on the estimated damage associated with the main local air pollutants, while the climate change framework is based on a CO2 tax. The case of Spain is examined, using an Input-Output model in combination with a micro-simulation model. The distributional implications of a revenue-neutral tax reform are also explored. We find that taxes on local pollutants are more regressive than those levied on climate change pollutants, because the goods implicitly taxed have a greater weight in the consumer basket of low income groups, even if the tax revenues are recycled.

Suggested Citation

  • Xaquín Garcia-Muros & Mercedes Burguillo & Mikel Gonzalez-Eguino & Desiderio Romero-Jordán, 2014. "Local air pollution and global climate change taxes: a distributional analysis," Working Papers 2014-01, BC3.
  • Handle: RePEc:bcc:wpaper:2014-01
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    Cited by:

    1. Mardones, Cristian & Baeza, Nicolas, 2018. "Economic and environmental effects of a CO2 tax in Latin American countries," Energy Policy, Elsevier, vol. 114(C), pages 262-273.
    2. Xavier Labandeira & José M. Labeaga & Xiral López-Otero, 2019. "New Green Tax Reforms: Ex-Ante Assessments for Spain," Sustainability, MDPI, vol. 11(20), pages 1-25, October.
    3. Mathias Kirchner & Mark Sommer & Claudia Kettner-Marx & Daniela Kletzan-Slamanig & Katharina Köberl & Kurt Kratena, 2018. "CO2 Tax Scenarios for Austria. Impacts on Household Income Groups, CO2 Emissions, and the Economy," WIFO Working Papers 558, WIFO.

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    Keywords

    Environmental Tax Reform; Distributional Impact; Local air pollution taxes; global climate change taxes;
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