From regressive pollution taxes to progressive environmental tax reforms

Mireille Chiroleu-Assouline and Mouez Fodha

European Economic Review, 2014, vol. 69, issue C, 126-142

Abstract: European countries have increased their use of environmental tax instruments by designing new tax bases. But many countries face opposition from public opinion, for fear of the distributive consequences of these environmental tax reforms. This paper sheds light on the distributive consequences of environmental tax policies when households are heterogeneous. The objective is to assess whether an environmental tax reform could be Pareto improving, when the revenue of the pollution tax is recycled by a change in labor tax properties. We show that, whatever the degree of regressivity of the environmental tax alone, it is possible to design a recycling mechanism that renders the tax reform more Pareto efficient, by simultaneously decreasing the wage tax and increasing its progressivity.

Keywords: Environmental tax reform; Heterogeneity; Welfare analysis; Tax progressivity (search for similar items in EconPapers)
JEL-codes: D60 D62 E62 H23 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (82)

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Related works:
Working Paper: From regressive pollution taxes to progressive environmental tax reforms (2014)
Working Paper: From regressive pollution taxes to progressive environmental tax reforms (2014)
Working Paper: From regressive pollution taxes to progressive environmental tax reforms (2014)
Working Paper: From Regressive Pollution Taxes to Progressive Environmental Tax Reforms (2012)
Working Paper: From Regressive Pollution Taxes to Progressive Environmental Tax Reforms (2012)
Working Paper: From Regressive Pollution Taxes to Progressive Environmental Tax Reforms (2012)
Working Paper: From Regressive Pollution Taxes to Progressive Environmental Tax Reforms (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:69:y:2014:i:c:p:126-142

DOI: 10.1016/j.euroecorev.2013.12.006

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