DOUBLE DIVIDEND REVISITED: NON-REVENUE NEUTRAL TAX REFORMS

Takumi Haibara ()
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Takumi Haibara: Faculty of Economics, Aichi University, 4-60-6 Hiraike-cho, Nakamura-ku, Nagoya, Aichi 453-8777, Japan

Climate Change Economics (CCE), 2022, vol. 13, issue 04, 1-21

Abstract: The rebound effect requires a rethink of revenue recycling. It is this that this paper offers an alternative to mitigate this effect. Specifically, we adapt and extend the consumption-neutral tax reform of Haibara (Journal of Globalization and Development, 8, 1–11, 2017) to include pollution externalities. Unlike a revenue-neutral tax reform, this reform increases welfare irrespectively of the level of intercommodity tax distortions. With consumption-neutral schemes, exogenous energy efficiency improvements induce higher taxes on the dirty good consumption. Such tax hikes improve welfare more than would be the case in their absence. Consumption-neutral reforms can translate economic costs into a negative rebound effect and increase the first dividend. The double dividend is welcome but need not be a policy priority.

Keywords: Revenue recycling; rebound effects; consumption-neutral tax reforms; the double dividend hypothesis (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:wsi:ccexxx:v:13:y:2022:i:04:n:s2010007822500051

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DOI: 10.1142/S2010007822500051

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