The Distributional Impact of a Carbon Tax in Asia and the Pacific

Cristian Alonso and Joey Kilpatrick

No 2022/116, IMF Working Papers from International Monetary Fund

Abstract: While a carbon tax is widely acknowledged as an efficient policy to mitigate climate change, adoption has lagged. Part of the challenge resides in the distributional implications of a carbon tax and a belief that it tends to be regressive. Even when not regressive, poor households could be hurt by a carbon tax, particularly in countries that rely heavily on carbon-intensive energy sources. Using household surveys, we study how a carbon tax may affect households in the Asia Pacific region, the main source of CO2 emissions. We document a wide range of country-specific policies that could be implemented to compensate households, reduce inequality, and build support for adoption.

Keywords: Carbon pricing; Climate change; Compensation; Distributional effects; Inequality; means testing; Labor income; fiscal revenue; price of energy goods; carbon tax revenue; special administrative region; carbon pricing assessment tool; Carbon tax; Income; Household consumption; Consumption; Income inequality; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 50
Date: 2022-06-10
New Economics Papers: this item is included in nep-ene, nep-env, nep-pub and nep-sea
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