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Green Taxes and Administrative Costs: The Case of Carbon Taxation

In: Behavioral and Distributional Effects of Environmental Policy

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  • Sjak Smulders
  • Herman R. J. Vollebergh
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.
(This abstract was borrowed from another version of this item.)

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  • Sjak Smulders & Herman R. J. Vollebergh, 2001. "Green Taxes and Administrative Costs: The Case of Carbon Taxation," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 91-130, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:10606
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    References listed on IDEAS

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    Cited by:

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    2. Pope, Jeff & Owen, Anthony D., 2009. "Emission trading schemes: potential revenue effects, compliance costs and overall tax policy issues," Energy Policy, Elsevier, vol. 37(11), pages 4595-4603, November.
    3. Choi, Gobong & Huh, Sung-Yoon & Heo, Eunnyeong & Lee, Chul-Yong, 2018. "Prices versus quantities: Comparing economic efficiency of feed-in tariff and renewable portfolio standard in promoting renewable electricity generation," Energy Policy, Elsevier, vol. 113(C), pages 239-248.
    4. Vollebergh, Herman, 2013. "Environmental Taxes and Green Growth," Other publications TiSEM 9efd8e7a-397e-428f-95be-c, Tilburg University, School of Economics and Management.
    5. John Stranlund & Carlos Chávez, 2013. "Who should bear the administrative costs of an emissions tax?," Journal of Regulatory Economics, Springer, vol. 44(1), pages 53-79, August.
    6. Ben Youssef, Adel & Hammoudeh, Shawkat & Omri, Anis, 2016. "Simultaneity modeling analysis of the environmental Kuznets curve hypothesis," Energy Economics, Elsevier, vol. 60(C), pages 266-274.
    7. Herman R. J. Vollebergh, 2005. "Should Energy Taxation “Go Dutch†?," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(1), pages 60-66, 04.
    8. Jan Pavel & Leoš Vítek, 2015. "Vyvolané náklady daňového systému v ČR [Compliance Costs of the Czech Tax System]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(3), pages 317-330.
    9. Sim, Jeongeun & Kim, Bowon, 2021. "Regulatory versus consumer pressure and retailer responsibility for upstream pollution in a supply chain," Omega, Elsevier, vol. 101(C).
    10. Lenka Hyklová, 2017. "Administrative Costs of Environmental Taxes in the Czech Republic," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2017(4), pages 19-29.
    11. James Boyce & Matthew Riddle & Mark D. Brenner, 2005. "A Chinese Sky Trust? Distributional Impacts of Carbon charges and Revenue Recycling in China," Working Papers wp_brenner_riddle_boyce, Political Economy Research Institute, University of Massachusetts at Amherst.
    12. DAUBANES Julien, 2009. "Changement climatique, instruments économiques et propositions pour un accord post-Kyoto : une synthèse," LERNA Working Papers 09.19.295, LERNA, University of Toulouse.
    13. Vollebergh, Herman R.J., 2008. "Lessons from the polder: Energy tax design in The Netherlands from a climate change perspective," Ecological Economics, Elsevier, vol. 64(3), pages 660-672, January.
    14. Herman Vollebergh, 2004. "Lessons from the Polder: Is Dutch CO2-Taxation Optimal?," Working Papers 2004.6, Fondazione Eni Enrico Mattei.

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