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Environmental Tax Reform: Efficiency and Political Feasibility

Author

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  • Stefan Felder
  • Reto Schleiniger

Abstract

Command-and-control measures, despite their inefficiencies, are still the standard in environmental policy. This might be due to the fact that command-and-control instruments prevent monetary redistribution between sectors and households and leave property rights on remaining pollution with the emittents. The present paper interprets the no-redistribution policy as a political constraint and investigates on more efficient alternatives to command-and- control, using a computable general equilibrium model for Switzerland. Simulation results render schemes that refund environmental tax revenues by a sector-by-sector-subsidy on labor or output as welfare enhancing.

Suggested Citation

  • Stefan Felder & Reto Schleiniger, "undated". "Environmental Tax Reform: Efficiency and Political Feasibility," IEW - Working Papers 013, Institute for Empirical Research in Economics - University of Zurich.
  • Handle: RePEc:zur:iewwpx:013
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    File URL: http://www.econ.uzh.ch/static/wp_iew/iewwp013.pdf
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    References listed on IDEAS

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    1. Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-147, March.
    2. Yohe, Gary W, 1976. "Polluters' Profits and Political Response: Direct Control versus Taxes: Comment," American Economic Review, American Economic Association, vol. 66(5), pages 981-982, December.
    3. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, vol. 84(4), pages 1085-1089, September.
    4. Coelho, Philip R P, 1976. "Polluters' Profits and Political Response: Direct Control versus Taxes: Comment," American Economic Review, American Economic Association, vol. 66(5), pages 976-978, December.
    5. N/A, 1985. "General Policy," India Quarterly: A Journal of International Affairs, , vol. 41(1), pages 74-79, January.
    6. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226036335.
    7. Hahn, Robert W, 1990. "The Political Economy of Environmental Regulation: Towards a Unifying Framework," Public Choice, Springer, vol. 65(1), pages 21-47, April.
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    9. Cansier, Dieter & Krumm, Raimund, 1997. "Air pollutant taxation: an empirical survey," Ecological Economics, Elsevier, vol. 23(1), pages 59-70, October.
    10. Main, Robert S & Baird, Charles W, 1976. "Polluters' Profits and Political Response: Direct Control versus Taxes: Comment," American Economic Review, American Economic Association, vol. 66(5), pages 979-980, December.
    11. Goulder Lawrence H., 1995. "Effects of Carbon Taxes in an Economy with Prior Tax Distortions: An Intertemporal General Equilibrium Analysis," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 271-297, November.
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    More about this item

    Keywords

    Environmental tax reform; price-standard-approach; public choice; computable general equilibrium model;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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