European Green Deal: Environmental Taxation and Its Sustainability in Conditions of High Levels of Corruption

Igor Kotlán, Daniel Němec, Eva Kotlánová, Petr Skalka, Rudolf Macek and Zuzana Machová
Additional contact information
Igor Kotlán: Department of Economics and Economic Policy, PRIGO University, 736 01 Havířov, Czech Republic
Daniel Němec: Faculty of Economics and Administration, Masaryk University, 601 77 Brno, Czech Republic
Eva Kotlánová: School of Business Administration, Silesian University, 733 40 Karviná, Czech Republic
Petr Skalka: Department of Business Economy and Law, PRIGO University, 736 01 Havířov, Czech Republic
Rudolf Macek: Department of Economics and Economic Policy, PRIGO University, 736 01 Havířov, Czech Republic
Zuzana Machová: Department of Business Economy and Law, PRIGO University, 736 01 Havířov, Czech Republic

Sustainability, 2021, vol. 13, issue 4, 1-15

Abstract: Despite environmental taxation’s presumed advantages for long-term sustainable development goals, the problematic institutional conditions associated with high levels of corruption could become a significant obstacle undermining these efforts. Taking the example of the Czech Republic as a benchmark, the aim of this article is to evaluate the impact of corruption and its implications on the size of the official and the shadow economy in the sector burdened with environmental excise tax while confronting it with the sector not burdened with such tax. In terms of methodology, an extended DSGE (Dynamic stochastic general equilibrium) model has been used. In the case of the shadow economy, the two sectors, burdened and not burdened with environmental taxes, followed a similar trend. However, concerning the official economy, this research found out that if environmental taxation is not applied, then lower, non-systemic corruption has a positive effect on the size of production as the effect of increased workforce motivation clearly dominates, suppressing the effect of reduced capital accumulation. Conversely, in the sector burdened with environmental taxation, corruption has an almost unequivocally negative effect on the production economy. In this sense, corruption has the capacity to limit the implementation of sustainable development policies including the European Green Deal, especially if it is systemic in nature.

Keywords: European Green Deal; environmental taxation; corruption; shadow economy; sustainability; DSGE modelling; tax policy; economic policy (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/2071-1050/13/4/1981/pdf (application/pdf)
https://www.mdpi.com/2071-1050/13/4/1981/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:4:p:1981-:d:498087

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().