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Carbon Tax Burdens on Low-Income Households: A Reason for Delaying Climate Policy?

Author

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  • Ian Parry

Abstract

This paper discusses techniques for measuring the incidence of carbon taxes across different household income groups and provides some cross-country estimates of these effects for selected advanced countries. The general message of this paper is that distributional concerns should not necessarily hold up carbon pricing. Energy price impacts may be less regressive than often supposed and there are ample opportunities in advanced countries for adjusting tax and benefit schedules to alter the overall incidence of a carbon tax reform. Insofar as possible however, using carbon tax revenues in ways that enhance economic efficiency is critical for containing overall costs to the economy.

Suggested Citation

  • Ian Parry, 2015. "Carbon Tax Burdens on Low-Income Households: A Reason for Delaying Climate Policy?," CESifo Working Paper Series 5482, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5482
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp5482.pdf
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:ecolec:v:138:y:2017:i:c:p:109-125 is not listed on IDEAS
    2. Wang, Qian & Hubacek, Klaus & Feng, Kuishuang & Wei, Yi-Ming & Liang, Qiao-Mei, 2016. "Distributional effects of carbon taxation," Applied Energy, Elsevier, vol. 184(C), pages 1123-1131.
    3. Julie-Anne Cronin & Don Fullerton & Steven Sexton, 2017. "Vertical and Horizontal Redistributions from a Carbon Tax and Rebate," CESifo Working Paper Series 6373, CESifo Group Munich.

    More about this item

    Keywords

    carbon tax; distributional incidence; fiscal reform; climate change; revenue recycling;

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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