Environmental Tax Policy in Romania in the Context of the EU: Double Dividend Theory

Magdalena Radulescu, Crenguta Ileana Sinisi, Constanta Popescu, Silvia Elena Iacob and Luigi Popescu
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Magdalena Radulescu: Faculty of Economics and Law, University of Pitesti, Bd. Republicii, No. 71, Pitesti, 110062 Arges, Romania
Crenguta Ileana Sinisi: Faculty of Economics and Law, University of Pitesti, Bd. Republicii, No. 71, Pitesti, 110062 Arges, Romania
Constanta Popescu: Faculty of Economics, Doctoral School, University “Valahia” of Targoviste, Str. Aleea Sinaia, No. 13, Targoviste, 130004 Dambovita, Romania
Silvia Elena Iacob: Faculty of Theoretical and Applied Economics, Academy of Economic Studies, Calea Dorobanti, No. 15-17, sector 1, 010552 Bucuresti, Romania
Luigi Popescu: Faculty of Economics and Law, University of Pitesti, Bd. Republicii, No. 71, Pitesti, 110062 Arges, Romania

Sustainability, 2017, vol. 9, issue 11, 1-20

Abstract: In the last decade, environment protection gained much more significance in designing the economic policies in the European Union (EU) countries. There are many economic and policy differences between the European countries, despite of the harmonization process inside the EU area. The path of implementation of the environmental tax reforms in the EU countries differs greatly from one country to another and the effects of such taxation in the economic and environmental areas are manifold. The authors of this paper have agreed to undertake the task of testing the double dividend hypothesis of the environmental taxation in Romania (an energy-intensive country) versus the EU area as a whole, using Vector Error Correction Model (VECM) techniques and Ordinary Least Squares (OLS) estimations. Our findings show that this hypothesis is validated neither in Romania (in the economic growth area) nor in the EU area as a whole (in the unemployment area). Therefore, Romania cannot increase the level of the environmental tax for supporting economic growth, but it can grant environmental subsidies for decreasing the emissions and supporting the economic growth. This could be achieved by expanding the tax labor base and by collecting higher budgetary revenues to sustain such environmental subsidies. As far as the EU area is concerned, it is a necessary measure to continue the descending trend for the labor taxation to achieve the goal of improving the employment rate.

Keywords: environmental taxes; Growth Domestic Product (GDP) growth; unemployment; greenhouse CO 2 emissions; Romania; EU area (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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