Environmental Taxation: Pigouvian or Leviathan ?

Isabelle Cadoret, Emma Galli and Fabio Padovano
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Emma Galli: DiSSE,Sapienza University of Rome, Rome, Italy

Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS from Condorcet Center for political Economy

Abstract: This paper empirically examines for what purposes governments actually use environmental taxes and how efficient they are in achieving such goals. The theoretical literature proposes four alternative interpretations: strictly or loosely Pigouvian, the double dividend and the Leviathan hypotheses. We consider the EU-27 countries that committed themselves to correcting a negative environmental externality, the greenhouse gas (GHG) emissions, by 2020. A dynamic system of simultaneous equations shows that data fail to support both Pigouvian interpretations, since ET neither bring countries closer to the GHG reduction targets, nor governments use them for broader purposes of environmental protection. As no evidence is found that governments substitute ET to more distortive forms of taxation, the analysis suggests that the Leviathan interpretation, which views ET as any other type of tax that governments use to maximize revenues, is the most consistent with reality. Creation-Date: 2017-08

Keywords: Environmental taxes; environmental policy goals; Pigouvian taxation; double dividend hypothesis; Leviathan government; dynamic simultaneous equations model (search for similar items in EconPapers)
JEL-codes: D72 D73 D78 H54 H87 Q28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Environmental taxation: Pigouvian or Leviathan? (2021)
Working Paper: Environmental taxation: Pigouvian or Leviathan? (2021)
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