Tax Revenue-Financed Public Abatement and Welfare: A Consumption Tax Case

Takumi Haibara

No 12, GSICS Working Paper Series from Graduate School of International Cooperation Studies, Kobe University

Abstract: This paper develops a model of public abatement earmarked by either a pollution tax or a consumption tax and shows that consumption tax revenue-financed public abatement is superior to pollution tax revenue-financed public abatement in terms of welfare when the pollution tax rate rises. It implies that the optimal pollution tax rate is higher under consumption tax revenue-financed public abatement than it is under pollution tax revenue-financed public abatement. These results are policy oriented that policy makers of environmental protection are worth considering.

Pages: 16 pages
Date: 2006-12
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Persistent link: https://EconPapers.repec.org/RePEc:kcs:wpaper:12

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