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Pollution and Reforms of Domestic and Trade Taxes towards Uniformity

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  • Michael S. Michael
  • Panos Hatzipanayotou

Abstract

This paper builds a small open economy trade model where there is pollution from the production and consumption of goods. In the presence of production and consumption pollution, we examine a piecemeal consumer-price-neutral reform of the tariff and consumption tax and a piecemeal producer-price-neutral reform of the export and production taxes on a specific good. The paper identifies sufficient conditions under which the above tax reforms improve welfare and increase government tax revenues.

Suggested Citation

  • Michael S. Michael & Panos Hatzipanayotou, 2012. "Pollution and Reforms of Domestic and Trade Taxes towards Uniformity," University of Cyprus Working Papers in Economics 11-2012, University of Cyprus Department of Economics.
    • Handle: RePEc:ucy:cypeua:11-2012
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    File URL: https://papers.econ.ucy.ac.cy/RePEc/papers/11-12.pdf
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    References listed on IDEAS

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    1. Michael, Michael S. & Hatzipanayotou, Panos & Miller, Stephen M., 1993. "Integrated reforms of tariffs and consumption taxes," Journal of Public Economics, Elsevier, vol. 52(3), pages 417-428, October.
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    11. Takumi Naito & Kenzo Abe, 2008. "Welfare‐ and Revenue‐Enhancing Tariff and Tax Reform under Imperfect Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(6), pages 1085-1094, December.
    12. Neary, Peter & Ruane, Frances P, 1988. "International Capital Mobility, Shadow Prices, and the Cost of Protection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(4), pages 571-585, November.
    13. Kreickemeier, Udo & Raimondos-Møller, Pascalis, 2008. "Tari[ff]-tax reforms and market access," Journal of Development Economics, Elsevier, vol. 87(1), pages 85-91, August.
    14. John Beghin & David Roland-Holst & Dominique van der Mensbrugghe, 1997. "Trade and Pollution Linkages: Piecemeal Reform and Optimal Intervention," Canadian Journal of Economics, Canadian Economics Association, vol. 30(2), pages 442-455, May.
    15. Hatzipanayotou, Panos & Michael, Michael S. & Miller, Stephen M., 1994. "Win-win indirect tax reform : A modest proposal," Economics Letters, Elsevier, vol. 44(1-2), pages 147-151.
    16. Panos Hatzipanayotou & Sajal Lahiri & Michael Michael, 2008. "Cross-Border Pollution, Terms of Trade, and Welfare," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(3), pages 327-345, November.
    17. Arja H. Turunen‐Red & Alan D. Woodland, 2004. "Multilateral Reforms of Trade and Environmental Policy," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 321-336, August.
    18. Ju, Jiandong & Krishna, Kala, 2000. "Welfare and market access effects of piecemeal tariff reform," Journal of International Economics, Elsevier, vol. 51(2), pages 305-316, August.
    19. A. Bovenberg, 1999. "Green Tax Reforms and the Double Dividend: an Updated Reader's Guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 421-443, August.
    20. Naito, Takumi, 2006. "Growth, revenue, and welfare effects of tariff and tax reform: Win-win-win strategies," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1263-1280, August.
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    Citations

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    Cited by:

    1. 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.
    2. Michael S. Michael & Panos Hatzipanayotou, 2013. "Cooperative and Non-Cooperative Equilibrium Consumption Taxes in the Presence of Cross-Border Pollution," CESifo Working Paper Series 4501, CESifo.
    3. Catia Montagna & Avanti Nisha Pinto & Nikolaos Vlassis, 2020. "Welfare and Trade Effects of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(2), pages 331-345, July.
    4. Takumi Haibara, 2022. "A note on pollution and reforms of domestic and trade taxes toward uniformity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(1), pages 201-214, February.
    5. 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

    Domestic and trade tax reforms; Production and consumption generated pollution; Government tax revenues; Welfare;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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