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The polluter-doesn't-pay principle

Ralf Martin (), Ulrich Wagner () and Laure de Preux ()

CentrePiece - The Magazine for Economic Performance from Centre for Economic Performance, LSE

Abstract: By granting discounts on environmental taxes to heavy polluting firms, the government is missing out on significant tax revenues and achieving considerably less in reducing greenhouse gas emissions. That is the central conclusion of research by Ralf Martin and colleagues, which reveals the failings of the UK's climate change levy. Their study shows that firms that enjoy a discount from the levy, claiming that such measures damage their ability to compete in the global economy, do not in fact face higher risks to their competitiveness. Firms that pay the full climate change levy reduce their energy use and their emissions by more than those that get a tax discount.

Keywords: Industry compensation; industrial relocation; emissions trading; permit allocation; EUETS; firm data (search for similar items in EconPapers)
JEL-codes: H23 H25 Q52 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
Date: 2012-05
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