On the distributional impact of a carbon tax in developing countries: the case of Indonesia

Yusuf, Arief Anshory; Resosudarmo, Budy P.

doi:10.1007/s10018-014-0093-y

Cited by 78 publications

(67 citation statements)

References 22 publications

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“…In the realm of climate mitigation, many national studies assess the distributional impacts of mitigation using general equilibrium approaches, mostly for the US and Europe [31][32][33][34][35][36][37][38][39][40][41][42] , though increasingly also for developing countries 32,[43][44][45][46][47][48] . Methodologically, the literature reveals a variety of stages towards including distributional impacts on households.…”

Section: State Of the Artmentioning

confidence: 99%

Improving poverty and inequality modelling in climate research

et al. 2017

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Section: State Of the Artmentioning

confidence: 99%

Improving poverty and inequality modelling in climate research

et al. 2017

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“…There is strong evidence that this does not hold for developing countries (Boyce, Brenner, and Riddle, 2005;Van Heerden et al, 2006;Yusuf and Resosudarmo, 2007;Corong, 2008).…”

Section: Introductionmentioning

confidence: 99%

Fuel Exemptions, Revenue Recycling, Equity and Efficiency: Evaluating Post-Kyoto Policies for Switzerland

Imhof

2012

Swiss J Economics Statistics

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Summary The Swiss CO2 law runs out in 2012, together with the first commitment period of the Kyoto Protocol. Currently, the Swiss parliament is deciding on the successor of the law that aims to achieve a 20% reduction of CO2 emissions below 1990 levels by 2020. As a means to achieve this ambitious target, the current tax on stationary fuels at 36 CHF/t CO2 will be maintained, while transportation fuels will still be exempted from the carbon tax. Currently, the tax revenues are fully redistributed as a per-capita lump-sum payment via mandatory health insurance and to the employers proportional to their wage payments. This recycling scheme is likely to be prolonged. However, in the presence of the actual debate on the revision of the CO2 law, this paper reexamines the exemption of transportation fuels and the revenue recycling scheme under two points of view. First, I examine the effects on cost-effectiveness and second, I study their impact on equity. Using a static computable general equilibrium model of the Swiss economy incorporating 14 household groups, I find that tax exemptions increase the economy-wide costs of a carbon tax, yet fail to ease the effect on over-proportionally affected households. However, adjusting CO2 tax rates to correct for pre-existing fuel taxes that do not internalize any external effects may decrease the economy-wide cost of a green tax reform. On the other hand the choice of the recycling scheme has less of an effect on efficiency, but its impact on the distributional outcome of the tax reform has to be considered. Choosing an optimal, economy-wide tax will decrease overall costs considerably, while a lump-sum per-capita rebate will result in a progressive tax package at reasonable costs.

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“…This view is, however, contested as the efficiency of the consumption taxes enables public authorities to implement compensation and redistribution schemes (Bankman and Weisbach 2005;Decoster et al 2010;Corbacho et al 2013). Those schemes are in particular needed in the case of the development of environmental consumption taxes (Ekins and Dresner 2004;West and Williams 2004;Büchs et al 2011;Kosonen 2012;Dissou and Siddiqui 2014;Beck et al 2015;Yusuf and Resosudarmo 2015). In the DaVAT framework, the important thing to keep in mind is that the increase in most polluting products' prices is associated with a decrease in the price of the (most numerous) low-polluting products previously subject to VAT, which has redistributive properties.…”

Section: Acceptability Of the Proposalmentioning

confidence: 99%

From value-added tax to a damage and value-added tax partially based on life cycle assessment: principles and feasibility

Timmermans

Achten

2018

Int J Life Cycle Assess

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Purpose The purpose of this article is to examine the arguments in favor of a shift from value-added tax (VAT) or sales tax to a damage and value-added tax (DaVAT) partially based on the life cycle assessment (LCA) of goods and services. With this shift, goods and services that seriously harm the environment and human health will be priced up, those that impact them less will be priced down. The paper recalls the proposal made by De Camillis and Goralczyk (Int J Life Cycle Assess 18: [263][264][265][266][267][268][269][270][271][272] 2013) to differentiate the VAT rate associated with products according to their environmental impacts over their life cycle. The paper suggests a new way to convert VAT into DaVAT, examines the operating principles of such a system, and considers its practical feasibility. The new policy tool based on LCA presented is intended to be applied to every country wishing to reform its consumption tax system in order to strive for a more sustainable future. Some aspects specific to countries having the same currency, notably the Euro zone, are also discussed. Methods The proposal of De Camillis and Goralczyk is discussed from the perspective of both environmental performance and compliance with LCA standards. To overcome the identified difficulties, a new way of adapting VAT (or consumption taxes in general) according to LCA is suggested. The proposal relies on three essential points: (i) apply VAT (or consumption taxes in general) to all goods and services and reduce its multiple rates to one single low rate (e.g., 3%) called uniform VAT (UVAT); (ii) add to UVAT a per-unit tax called global damage tax (GDT) calculated on the basis of environmental impacts assessed by means of specific or generic LCAs. In the case of potentially high-polluting products or industries, a specific LCA will be automatically imposed. The obligation to assess high-polluting activities already exists in many countries with, e.g., environmental impact studies, but the impacts are not necessarily evaluated by LCA; (iii) in order to reflect environmental, social, or ethical concerns specific to a country, another damage tax termed specific damage tax (SDT) is proposed that extends beyond LCA. DaVAT is the sum of UVAT, GDT, and SDT. DaVAT is conceived not as an additional burden but rather as a shift of taxation, as the rate of the old consumption taxes can decrease proportionally to the increase of GDT. DaVAT is also designed in such a way that the erosion of tax revenues, when pollutant would decline, is offset by the extension of the tax to all goods and services and by the possibility to gradually re-increase the UVAT rate when the number of highly polluting products decreases. Results and discussion The proposal is examined first from a theoretical point of view by considering which principles should be used to comply with LCA standards and general requirements of (environmental) tax policies. Four general principles emerge: consistency in the choice of the functional unit and in the characterization, n...

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On the distributional impact of a carbon tax in developing countries: the case of Indonesia

Cited by 78 publications

References 22 publications

Improving poverty and inequality modelling in climate research

Improving poverty and inequality modelling in climate research

Fuel Exemptions, Revenue Recycling, Equity and Efficiency: Evaluating Post-Kyoto Policies for Switzerland

From value-added tax to a damage and value-added tax partially based on life cycle assessment: principles and feasibility

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