The environmental tax and subsidy reform in Mexico

Johanna Arlinghaus and Kurt van Dender
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Johanna Arlinghaus: OECD
Kurt van Dender: OECD

No 31, OECD Taxation Working Papers from OECD Publishing

Abstract: In a bold policy effort, Mexico recently moved away from subsidies to transport fuels, increased tax rates on these fuels and introduced a carbon tax. This paper analyses these reforms using a broad set of criteria that consider the main practical dimensions of environmental policy design: environmental effectiveness, equity and distributional impacts, broader tax system impacts, macroeconomic effects, compliance and administration, policy process and consistency. The reforms significantly improve the extent to which the external costs of energy use are reflected in prices and increase government revenues, but, as price deregulation progresses further, more attention may need to be devoted to analysing and addressing the policies’ distributive effects. The analysis also highlights that ease of administration and collection are an important and desirable property of carbon taxes, especially in emerging market contexts.

Keywords: carbon pricing; distributional effects; energy taxation; fossil-fuel subsidies; tax reform (search for similar items in EconPapers)
JEL-codes: H23 Q48 Q52 (search for similar items in EconPapers)
Date: 2017-07-05
New Economics Papers: this item is included in nep-ene, nep-env, nep-pbe, nep-pub, nep-reg and nep-res
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:ctpaaa:31-en

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