Energy Taxes and Household Compliance with the Kyoto Protocol

Desiderio Romero-Jordán and José Félix Sanz-Sanz
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Desiderio Romero-Jordán: Universidad Rey Juan Carlos
José Félix Sanz-Sanz: Universidad Complutense de Madrid, jfelizs@ccee.ucm.es
Authors registered in the RePEc Author Service: Desiderio Romero-Jordan (desiderio.romero@urjc.es)

Public Finance Review, 2009, vol. 37, issue 2, 142-169

Abstract: The implementation of tax reforms to reduce carbon dioxide (CO 2 ) emissions has become increasingly popular. Nevertheless before prescribing these measures, they should be subject to a cost-benefit analysis. This paper evaluates the effects, in Spain, of a rise in the excise duties on energy to a level equal to the average of the EU-15. To this end, a complete demand model, comprising four energy products and fourteen nonenergy products, is estimated. The results indicate that such a reform, despite the fact that it would reduce CO 2 emissions by 11 million tons per year, would produce efficiency costs of 15.88¢ for each euro collected, causing households an average annual welfare loss of 228. Moreover, the progressivity and redistributive capacity of Spanish indirect taxation would be also reduced. As a result, the private welfare loss arising from the reform would be approximately four times greater than its estimated social benefits.

Keywords: energy; VAT; excise duties; elasticity; behavioral microsimulation (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:37:y:2009:i:2:p:142-169

DOI: 10.1177/1091142108327356

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