Differentiation of Green Taxes: A Political-Economy Analysis for Germany

Niels Anger, Christoph Böhringer and Andreas Lange

No 06-003, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: In this paper we study political-economy determinants of the differentiation of environmental taxes between sectors. Using a common-agency model, we provide predictions on tax differentiation which are then tested using data from the German Ecological Tax Reform. As the reform is revenue neutral and reduces labor costs, tax differentiation is not only determined by the activity of lobby groups favoring reduced tax rates, but also by the groups? interest in revenue rebates to labor. Empirical data underpin our theoretical findings: A regression analysis of Germany?s green tax reform explains environmental tax differentiation by the presence of sectoral interest groups. Besides market concentration and energy demand elasticities, the exposure of industries to international trade flows plays an important role in the environmental tax design.

Keywords: environmental tax reform; interest groups; common agency (search for similar items in EconPapers)
JEL-codes: D62 H23 P16 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-ene, nep-env, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:4582

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