Seminars & webinars
11 March, 2021

Online seminar | Gathering Political Support for Green Tax Reform


Where: online
Location:

GoToWebinar

Event's Timetable:

March 11th, 2021 - h 4:00 PM

Information:

To participate please register here

Speaker:

Prof. Rick van der Ploeg
Oxford University and University of Amsterdam

introduced by


Prof. Sergio Vergalli
Fondazione Eni Enrico Mattei, University of Brescia, IAERE

Abstract

Green tax reform is unpopular, because typically the poor are hurt most by the higher prices of carbon-intensive commodities. If revenues from carbon taxation are recycled, it may be feasible to gain popular support for green tax reform. To investigate this, we estimate an EASI demand system from German household data and estimate a labour supply schedule using wage data and the German income tax schedule. If the revenue from a carbon tax is recycled via a lump-sum transfer to all households, this gives more equitable albeit less efficient outcomes, yet 70% of households are worse off. If the revenue is recycled via lower income taxes, there is more efficiency at the expense of more inequality, and just more than half of households would benefit. With a recycling mix of lump-sum transfers and lower income taxes, popular support can be mustered without hurting equity too much. We also investigate the effects of a target for curbing emissions and of emission intensities that increase in the carbon tax.

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