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

Reto Schleiniger

No 73, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: The present paper applies a theoretical two-sector three-factor model to analyze a variety of energy tax reforms with the common feature of at least partly exempting the energy-intensive export sector from the tax. As a result, all scenarios with exemptions reduce energy less than the non-discriminating textbook version of the energy tax. Moreover, in the two scenarios that exemplify typical attributes of the tax reforms in Germany and Denmark, an increase in total energy use is possible. This is due to a positive output effect resulting from a substitution of the energy-intensive for the labor-intensive commodity.

Keywords: Environmental tax reform; general equilibrium model (search for similar items in EconPapers)
JEL-codes: D50 H20 Q40 (search for similar items in EconPapers)
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