Green Taxes and Administrative Costs: The Case of Carbon Taxation

Sjak Smulders () and Herman R.J. Vollebergh

No 7298, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper explores the trade-off between incentive effects and administrative costs associated with the implementation of various environmental tax instruments, with special reference to carbon taxes. In a simple model, we show under what conditions it is optimal to use input rather than emission taxes to internalize environmental externalities. Mixed tax regimes are also studied. If linkage of emissions to inputs is close, if abatement possibilities are costly, and if administrative costs of emission taxes are high, emission taxes should not be introduced. It is shown that these conditions directly apply to current tax policies toward CO2 emissions in several European countries that harness pre-existing energy taxes. First, there is a one-to-one correspondence between carbon content of energy and CO2 emissions. Second, only few possibilities exist to abate CO2 emissions separately. Third, energy excises allow to save on administrative costs. Broadening the carbon tax base by removing certain widely-used exemptions for energy production (and possibly adding emission taxes or abatement subsidies for selected industries) is likely to increase incentives for carbon reduction without significant additional administrative costs.

Date: 1999-08
New Economics Papers: this item is included in nep-agr, nep-cdm, nep-ene, nep-env, nep-pbe and nep-pub
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published as Green Taxes and Administrative Costs: The Case of Carbon Taxation , Sjak Smulders, Herman R. J. Vollebergh. in Behavioral and Distributional Effects of Environmental Policy , Carraro and Metcalf. 2001

Downloads: (external link)
http://www.nber.org/papers/w7298.pdf (application/pdf)

Related works:
Chapter: Green Taxes and Administrative Costs: The Case of Carbon Taxation (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:7298

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w7298

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().