The carbon tax and tax reform debate

This chapter discusses how economists measure the burden of a carbon tax—which households have less spending power because of the tax. It also discusses fairness in the tax code and how the revenue, which can be substantial, from a carbon tax can be returned to households and businesses in ways that enhance the fairness and efficiency of the overall tax system. A common belief is that a carbon tax is regressive—that it disproportionately burdens poor households. Studies discussed in this chapter refute this belief and argue that judicious use of the carbon tax revenue can make a carbon tax reform (tax and return of the revenue) even more progressive.

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A Broader Perspective on the Tax Reform Debate

The Economists Voice ◽

10.2202/1553-3832.1148 ◽

2005 ◽

Vol 3 (1) ◽

Cited By ~ 1

Author(s):

Michael J Boskin

Keyword(s):

Tax Reform ◽

Reform Debate

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How to make a carbon tax reform progressive: The role of subsistence consumption

Economics Letters ◽

10.1016/j.econlet.2015.11.019 ◽

2016 ◽

Vol 138 ◽

pp. 100-103 ◽

Cited By ~ 31

Author(s):

David Klenert ◽

Linus Mattauch

Keyword(s):

Tax Reform ◽

Carbon Tax

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A computable general equilibrium analysis of environmental tax reform in Japan with a forward-looking dynamic model

Sustainability Science ◽

10.1007/s11625-021-00903-4 ◽

2021 ◽

Cited By ~ 2

Author(s):

Shiro Takeda ◽

Toshi H. Arimura

Keyword(s):

General Equilibrium ◽

Computable General Equilibrium ◽

Tax Reform ◽

Carbon Tax ◽

Equilibrium Analysis ◽

Corporate Taxes ◽

Environmental Tax ◽

Environmental Tax Reform ◽

Lump Sum ◽

Pure Carbon

AbstractThe Japanese government plans to reduce greenhouse gas emissions by 80% by 2050. However, it is not yet clear which policy measures the government will adopt to achieve this goal. In this regard, environmental tax reform, which is the combination of carbon regulation and the reduction of existing distortionary taxes, has attracted much attention. This paper examines the effects of an environmental tax reform in Japan. Using a dynamic computable general equilibrium (CGE) model, we analyze the quantitative impacts of an environmental tax reform and clarify which types of environmental tax reform are the most desirable. In the simulation, we introduce a carbon tax and consider the following four scenarios for the use of the carbon tax revenue: (1) a lump-sum rebate to the household, (2) a cut in income taxes, (3) a cut in corporate taxes and (4) a cut in consumption taxes. The first scenario is a pure carbon tax, and the other three scenarios are types of environmental tax reform. Our CGE simulation shows that (1) environmental tax reform tends to generate more desirable impacts than the pure carbon tax and that (2) the strong double dividend is obtained in some cases. In particular, we show that a cut in corporate taxes leads to the most desirable policy in terms of GDP and national income.

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Promoting Green Development in China's New Development Stage Through Tax Reform

Financial Journal ◽

10.31107/2075-1990-2021-5-44-50 ◽

2021 ◽

Vol 13 (5) ◽

pp. 44-50

Author(s):

Fu Zhihua ◽

◽

Cheng Yu ◽

Keyword(s):

Tax Reform ◽

Carbon Tax ◽

Development Stage ◽

Economic Transformation ◽

Green Growth ◽

Ecological Civilization ◽

Tax System ◽

Green Development ◽

Wheel Drive ◽

New Development

Green growth is not only an important way to build ecological civilization and promote economic transformation, but also the core essence of ensuring high-quality economic development in the new development stage. Optimization of tax system design is a key measure to release institutional dividend to promote green development. From the perspective of tax reform, this paper analyzes the current situation and the challenges of tax greening in China in recent years, and puts forward general thoughts and suggestions on how to promote green development at the new stage so as to create a two-wheel drive mechanism of carbon tax and environmental protection tax, lead the structural reform of China’s tax system, continuously improve tax regulation, and construct a green tax system with multiple taxes and means to cooperate with each other and to regulate it comprehensively and effectively.

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An Assessment of Japanese Carbon Tax Reform Using the E3MG Econometric Model

The Scientific World JOURNAL ◽

10.1100/2012/835917 ◽

2012 ◽

Vol 2012 ◽

pp. 1-9 ◽

Cited By ~ 5

Author(s):

Soocheol Lee ◽

Hector Pollitt ◽

Kazuhiro Ueta

Keyword(s):

Tax Reform ◽

Econometric Model ◽

Carbon Tax ◽

Positive Outcome ◽

Economic Benefits ◽

Tax Rates ◽

Revenue Recycling ◽

University Of Cambridge ◽

Carbon Taxation ◽

The University

This paper analyses the potential economic and environmental effects of carbon taxation in Japan using the E3MG model, a global macroeconometric model constructed by the University of Cambridge and Cambridge Econometrics. The paper approaches the issues by considering first the impacts of the carbon tax in Japan introduced in 2012 and then the measures necessary to reduce Japan’s emissions in line with its Copenhagen pledge of −25% compared to 1990 levels. The results from the model suggest that FY2012 Tax Reform has only a small impact on emission levels and no significant impact on GDP and employment. The potential costs of reducing emissions to meet the 25% reduction target for 2020 are quite modest, but noticeable. GDP falls by around 1.2% compared to the baseline and employment by 0.4% compared to the baseline. But this could be offset, with some potential economic benefits, if revenues are recycled efficiently. This paper considers two revenue recycling scenarios. The most positive outcome is if revenues are used both to reduce income tax rates and to increase investment in energy efficiency. This paper shows there could be double dividend effects, if Carbon Tax Reform is properly designed.

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