Environmental Taxation and the Double Dividend" explores the welfare effects of environmental taxes in a second-best framework. It starts from a benchmark model which reveals that environmental taxes typically exacerbate pre-existing tax distortions, even if the revenues are used to cut other distortionary taxes. Subsequent chapters extend the benchmark model by introducing capital, terms of trade effects, transfers, involuntary unemployment, or environmental feedbacks. Thus, the book reveals several channels through which a double-dividend can be obtained. However, it also shows the trade-offs they induce. Simulations with the models illustrate the importance of these trade-offs for European economies. This book is a useful tool for graduates, post graduates, researchers and staff of universities with fiscal and environmental departments. International organizations such as the IMF, OECD and the World Bank, and policy makers within governments: Ministries of Finance/Economics/Environment. Research Institutes, both private and public will also benefit from this piece of work.
Addresses the issue of optimal second-best pollution taxes and evaluates the likehood that a double dividend of environmental and nonenvironmental benefits can be obtained from environmental taxes substituting for taxes on labor income Journal of Economic Literature
Abbreviated Contents: Preface. Introduction. A Survey of the Double-Dividend Literature. Early Literature. Recent Literature. Tax Shifting. Political-Economy Issues. Interactions Between Dividends. Conclusions. Environmental Tax Reform in the Benchmark Model. The Benchmark Tool. Environmental Taxes on Households. Environmental Taxes on Firms. Optimal Environmental Taxes. Numerical Simulations. Conclusions. Appendices. The Role of Capital Mobility and Factor Substitution. The Model with Mobile Capital in Production. Optimal Taxation. Tax Reform from Labor to Pollution Taxes. Tax Reform from Capital to Pollution Taxes. The Model with Fixed Capital in Production. Optimal Taxation. Tax Reform from Labor to Pollution Taxes. Numerical Solutions. Conclusions. Appendices. Environmental Taxes as Trade-Policy Instruments. The Three-Country Model. Tax Shifting to Foreign Suppliers of Polluting Inputs. Tax Shifting to Foreign Users of Intermediate Inputs. Numerical Simulations. Conclusions. Environmental Taxes and Distributional Concerns. The Model with Heterogeneous Households. Environmental Tax Reform. Numerical Simulations. Conclusions. Labor-Market Imperfections and the Triple Dividend. The Model with an Imperfect Labor Market. Environmental Tax Reform. Numerical Simulations. Conclusions. Feedback Effects of the Environment on The Economy. Production Externalities. Non-Separable Consumption Externalities. Numerical Simulations. Conclusions. Green Tax Reform in an Endogenous Growth Model. The Model. Effects on Growth, Pollution and Welfare. Tax Shifting. Conclusions. Appendices. Conclusions. References.