Targeted Carbon Tax Reforms

King, Maia; Tarbush, Bassel; Teytelboym, Alexander

doi:10.2139/ssrn.3120330

Cited by 12 publications

(16 citation statements)

References 55 publications

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“…Accordingly, this means that the tax should include different tax rates for different firms to be effective. This proposition is also confirmed by King et al [54] who showed that environmental taxes should be targeted at specific goods/sectors to have an impact. Consequently, the same line of argument holds for the waste hierarchy tax.…”

Section: Waste Hierarchy Taxsupporting

confidence: 62%

Towards a Circular Economy Taxation Framework: Expectations and Challenges of Implementation

Milios

2021

Circ.Econ.Sust.

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The transition to a circular economy is a complex process requiring wide multi-level and multi-stakeholder engagement and can be facilitated by appropriate policy interventions. Taking stock of the importance of a well-balanced policy mix that includes a variety of complementing policy instruments, the circular economy action plan of the European Union (COM(2020) 98 final) includes a section about “getting the economics right” in which it encourages the application of economic instruments. This contribution presents a comprehensive taxation framework, applied across the life cycle of products. The framework includes (1) a raw material resource tax, (2) reuse/repair tax relief, and (3) a waste hierarchy tax at the end of life of products. The research is based on a mixed method approach, using different sources to analyse the different measures in the framework. More mature concepts, such as material resource taxes, are analysed by reviewing the existing literature. The analysis of tax relief on repairs is based on interviews with stakeholders in Sweden, where this economic policy instrument has been implemented since 2017. Finally, for the waste hierarchy tax, which is a novel proposition in this contribution, macroeconomic modelling is used to analyse potential impacts of future implementation. In all cases, several implementation challenges are identified, and potential solutions are discussed according to literature and empirical sources. Further research is required both at the individual instrument and at the framework level. Each of the tax proposals needs a more detailed examination for its specificities of implementation, following the results of this study.

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Section: Waste Hierarchy Taxsupporting

confidence: 62%

Towards a Circular Economy Taxation Framework: Expectations and Challenges of Implementation

Milios

2021

Circ.Econ.Sust.

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“…It, therefore, has explicit control on where FDI goes. King et al (2019); Lin and Li (2011); Davis and Kilian (2011); Bruvoll and Larsen (2004) investigate the effect of tax policy on environmental risk. They use a specific tax policy (carbon tax) to show that tax policy has a significant and negative effect on per-capita carbon emission.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The full benefit of tax policy should be exploited so that even if the tax is reformed to woo foreign investors it should at the same time moderate the direction of the investment. King et al (2019) report that designing tax policies to specific sectors of the economy have high elasticity and can effectively reduce aggregate emissions.…”

Section: Literature Reviewmentioning

confidence: 99%

Environmental risk, FDI and tax reforms: why we must worry

Yiadom¹,

Mensah²

2021

AJEMS

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PurposeIn this paper, we use empirical models to examine the main channel through which FDI escalates environmental risk. We explore whether countries with “weak” or better still low tax rate attract “dirty” FDI to deteriorate their environmentDesign/methodology/approachThe analysis uses a 40-year panel to show that foreign direct investment (FDI) and tax policy matter in accounting for cross-country environmental risk.FindingsOur sample finds support that the tax channel is the main medium through which FDI worsens environmental risk. By discomposing tax policy into low and high regimes, we report that countries that deliberately reform tax policy to bait FDI have higher environmental risk.Social implicationsA useful lesson from here is that using tax policy to lure FDI amounts to shortchanging capital risk for environmental risk.Originality/valueThe paper is unique because it identifies tax policy as a channel through which FDI affects the environment in Africa. Other studies overly simplifies the relationship between FDI and its impact on the environment, and it makes it difficult and ambiguous in offering specific policy direction.

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“…The latter could also be used to explore intersectoral leakage whereby carbon price increases in some sectors will increase emission in other sectors of the same country, thereby contributing to 'total' leakage. The theoretical literature suggests that intersectoral leakage as a result of partial carbon taxation can be positive or negative (King et al, 2019). Whether or not sectoral differentiation in carbon prices, in line with the prevailing climate policy practice, is less effective in lowering aggregate emissions is therefore an interesting but empirically largely unexplored matter.…”

Section: Discussionmentioning

confidence: 99%

“…Their model can also be interpreted as a two-country model with one sector. King et al (2019) consider more sophisticated intersectoral linkages and argue that the effects on aggregate emissions of partial carbon taxation depend on three factors, including the sector's level of emissions relative to aggregate emissions, the sector's intersectoral influence on emissions via upstream and downstream linkages, and the aggregate demand effects of rebating the tax revenue. They predict that carbon taxation in sectors with sufficiently high emissions will always translate in reductions of aggregate emissions.…”

Section: Inter-sectoral Leakagementioning

confidence: 99%

Revisiting Carbon Leakage

Wingender¹,

Misch²

2021

IMF Working Papers

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This paper estimates the carbon leakage rate across countries, arguably a key parameter in the international climate policy discussion including on border carbon adjustment, but which remains subject to significant uncertainty. We propose innovations along two lines. First, we exploit recently published data on sector-country-specific changes in energy prices to identify changes in domestic carbon emissions and other flows (rather than the historically limited variation in carbon prices or adherence to international climate agreements). Second, we present a simple accounting framework to derive carbon leakage rates from reduced-form regressions in contrast to existing papers, thereby making our results directly comparable to model-based estimates of carbon leakage. We show that carbon leakage rates differ across countries and could be larger than what existing estimates suggest.

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Targeted Carbon Tax Reforms

Cited by 12 publications

References 55 publications

Towards a Circular Economy Taxation Framework: Expectations and Challenges of Implementation

Towards a Circular Economy Taxation Framework: Expectations and Challenges of Implementation

Environmental risk, FDI and tax reforms: why we must worry

Revisiting Carbon Leakage

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