Border Tax Adjustments and Tariff-Tax Reforms with Consumption Pollution

Nikos Tsakiris (ntsak@uoi.gr), Panos Hatzipanayotou and Michael Michael

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: We develop a model of a small open economy, where pollution per unit of consumption between domestically produced and imported quantities of the same good differs. We show that the first-best policy combination calls for consumption taxes on all polluting goods, and Border Tax Adjustment (BTA) measures, i.e., tariffs or import subsidies. We identify conditions under which well known tariff-tax reform policies for developing economies, such as a consumer-price-neutral piecemeal reform of a trade and a consumption tax, and a consumer-price-neutral reform of all trade and consumption taxes improve welfare. We also evaluate whether a consumer-price-neutral reform of a tariff and a consumption tax is superior to a reform of a tariff alone.

Keywords: Consumption generated Pollution; Optimal Taxation; Border Tax Adjustments; Trade and Consumption Tax Reforms (search for similar items in EconPapers)
JEL-codes: F13 F18 H20 H21 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2018-11
New Economics Papers: this item is included in nep-int, nep-pbe and nep-pub
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https://papers.econ.ucy.ac.cy/RePEc/papers/17-18.pdf (application/pdf)

Related works:
Journal Article: Border tax adjustments and tariff‐tax reforms with consumption pollution (2019)
Working Paper: Border Tax Adjustments and Tariff-Tax Reforms with Consumption Pollution (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:17-2018

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