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Integrated Reforms of Indirect Taxes in the Presence of Pollution

Author

Listed:
  • Michael S. Michael
  • Sajal Lahiri
  • Panos Hatzipanayotou

Abstract

The literature on indirect tax reforms in pollution-ridden economies is quite limited. This paper, using a model of a small open economy with production and consumption generated pollution, considers the welfare implications of tax reforms within an integrated structure of consumption and production taxes. Specifically, both in the presence and absence of a binding government revenue constraint, we derive sufficient conditions for welfare improvement in the case where we implement (i) reforms in either production or consumption taxes, (ii) reforms in both consumption and production taxes and (iii) uniform changes in consumption taxes.

Suggested Citation

  • Michael S. Michael & Sajal Lahiri & Panos Hatzipanayotou, 2008. "Integrated Reforms of Indirect Taxes in the Presence of Pollution," CESifo Working Paper Series 2276, CESifo.
    • Handle: RePEc:ces:ceswps:_2276
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    References listed on IDEAS

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    Cited by:

    1. Li, Zhigang & Yuan, Jia & Song, Frank & Wei, Shangjin, 2014. "Is economic rebalancing toward consumption “greener”? Evidence from visibility in China, 1984–2006," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 1021-1032.

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    More about this item

    Keywords

    indirect tax reforms; production and consumption generated pollution; welfare; government tax revenues;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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