Energy Tax Reform with Exemptions for the Energy-intensive Export Sector

Reto Schleiniger

FinanzArchiv: Public Finance Analysis, 2002, vol. 58, issue 4, 449-463

Abstract: The present paper applies a two-sector two-factor model to analyze a variety of energy tax reforms that discriminate in favor of the energy-intensive export sector. As a result, all scenarios with exemptions reduce energy less than the non-discriminating textbook version. In one scenario that exemplifies typical attributes of the tax reform in Sweden, even an increase in total energy use is theoretically possible. This is due to a structural adjustment resulting from a substitution of the energy-intensive for the labor-intensive commodity. Moreover, simulation results show that the factor substitution effect in the energy-intensive sector is crucial to the reduction of energy.

JEL-codes: D50 H20 Q40 (search for similar items in EconPapers)
Date: 2002
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