Environmental tax revenue and public health care expenditure

Prince Fosu () and Kevin Sylwester ()
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Prince Fosu: Rockhurst University
Kevin Sylwester: Southern Illinois University

Economics Bulletin, 2025, vol. 45, issue 4, 2041 - 2054

Abstract: This paper considers to what extent environmental taxes are associated with more public healthcare spending. The double-dividend hypothesis argues that these taxes not only lower pollution but generate revenue that can then be used to enhance welfare such as health care. Using a panel of countries and controlling for pollution to better distinguish between these two dividends, we find that countries with greater environmental tax revenue do, indeed, spend more on public healthcare although this result primarily holds for energy and transportation taxes. This finding arises for both high- and low-income countries but is stronger for democracies.

Keywords: Environmental Tax; Pollution Tax; Double Dividend; Public Heath Care (search for similar items in EconPapers)
JEL-codes: H2 H5 (search for similar items in EconPapers)
Date: 2025-12-30
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