Green Taxes and Administrative Costs: The Case of Carbon Taxation / Sjak Smulders, Herman R.J. Vollebergh.

Format:

Book

Author/Creator:

Smulders, Sjak.

Contributor:

National Bureau of Economic Research.

Vollebergh, Herman R.J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7298.

NBER working paper series no. w7298

Language:

English

Subjects (All):

Environmental impact charges.

Environmental impact charges--Germany.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Green Taxes and Administrative Costs

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Cambridge, Massachusetts : National Bureau of Economic Research, 1999.

Summary:

This paper explores the trade-off between incentive effects and administrative costs associated with the implementation of various environmental tax instruments, with special reference to carbon taxes. In a simple model, we show under what conditions it is optimal to use input rather than emission taxes to internalize environmental externalities. Mixed tax regimes are also studied. If linkage of emissions to inputs is close, if abatement possibilities are costly, and if administrative costs of emission taxes are high, emission taxes should not be introduced. It is shown that these conditions directly apply to current tax policies toward CO2 emissions in several European countries that harness pre-existing energy taxes. First, there is a one-to-one correspondence between carbon content of energy and CO2 emissions. Second, only few possibilities exist to abate CO2 emissions separately. Third, energy excises allow to save on administrative costs. Broadening the carbon tax base by removing certain widely-used exemptions for energy production (and possibly adding emission taxes or abatement subsidies for selected industries) is likely to increase incentives for carbon reduction without significant additional administrative costs.

Notes:

Print version record

August 1999.