Green Tax Reforms in a Computable General Equilibrium Model for Italy
Green tax reforms,welfare analysis,general equilibrium,emissions' reduction
Climate Change and Sustainable Development
The paper studies the effects of green tax reforms within a walrasian computable general equilibrium model of the Italian economy calibrated on a microconsistent data set derived from the Input-Output table for the year 1990. Tax reforms increase taxation on the energy sector either through an increase in the revenue of the unit tax on all transactions, or by introducing a tax on final demand; in both cases a compensation is either operated through a reduction in personal income tax rates or the social security contributions on employees so as to keep public expenditure constant in real terms. The paper analyses the effects both on consumers’ welfare and on total emissions of some pollutants; for a thorough assessment of the reforms both effects should be considered keeping in mind that the benefits of emissions’ reduction are not incorporated into individual utility functions. None of the reforms emerge as unambiguously preferable with respect to others.