Energy-Tax Reform with Vertical Tax Externalities

Bert Saveyn and Stef Proost

FinanzArchiv: Public Finance Analysis, 2008, vol. 64, issue 1, 63-86

Abstract: The paper is a general equilibrium analysis of an energy-tax reform in a federation, measuring the welfare effects and the vertical tax externalities. Vertical tax externalities may arise when two government levels impose taxes on common tax bases. We show how the magnitude and sign of the vertical externality depend on the environmental goal, the tax-recycling scenario, the initial local and federal tax shares, and the size of the federation. Simulations illustrate the effects for a small European federation (e.g., Belgium) and a large federation (e.g., the U.S.).

Keywords: Tax reform; vertical tax externality; federalism (search for similar items in EconPapers)
JEL-codes: H23 H77 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (4)

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DOI: 10.1628//001522108X312078

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