Marginal indirect tax reform analysis with merit good arguments and environmental concerns: Norway, 1999

Fred Schroyen and Jørgen Aasness ()
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Jørgen Aasness: Statistics Norway, https://www.ssb.no/en/forskning/ansatte

Discussion Papers from Statistics Norway, Research Department

Abstract: We present a framework to identify and evaluate marginal tax reforms when merit good arguments and environmental concerns are given explicit consideration. It is applied to the Norwegian indirect tax system for 1999. The analysis shows that the reform passed in Parliament in November 2000 had a clear redistributive profile: a lowering of the VAT rate on food items and the introduction of a VAT on services benefits households in the lowest seven deciles while the upper three deciles got worse off. But we also argue that the aggregate demand responses triggered an increase in greenhouse gasses. Next, we show that if the 2000 reform had been complemented with tax rates rate changes on other products, it could have made every decile better off. Finally, we present socially optimal reforms, under different weights on inequality and the environment.

Keywords: indirect tax reform; merit good arguments; greenhouse gasses (search for similar items in EconPapers)
JEL-codes: H21 H23 (search for similar items in EconPapers)
Date: 2006-04
New Economics Papers: this item is included in nep-env and nep-pub
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:455

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