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Optimality of relaxing revenue-neutral restrictions in green tax reforms

Eduardo Giménez and Miguel Rodriguez ()

No 1605, Working Papers. Collection A: Public economics, governance and decentralization from Universidade de Vigo, GEN - Governance and Economics research Network

Abstract: Green Tax Reforms [GTR] have been initially devised as a policy proposal to tackle simultaneously several political goals, such as accomplishing environmental objectives together with lesser tax distortions requiring tax revenue recycling. Yet, recent fiscal stress episodes in many developed countries have defied this view. In this paper, we assess the convenience of revenue-neutral restrictions in GTR on efficiency basis. Usual revenue-neutral conditions impose on policymakers additional constraints that may restrain welfare gains. Our conclusions may provide theoretical support for the third generation of GTR (calling for a departure from revenue-neutral conditions on GTR), as well as some recent legal European experiences.

Keywords: green tax reforms; revenue neutrality; optimal taxation (search for similar items in EconPapers)
JEL-codes: H23 Q48 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2016-04
New Economics Papers: this item is included in nep-env and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:gov:wpaper:1605

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