Greener and Fairer: A Progressive Environmental Tax Reform for Spain
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Date
2019Author
Boehringe;, Christoph
Garcia-Muros, Xaquin
Gonzalez-Eguino, Mikel
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ECONOMICS OF ENERGY & ENVIRONMENTAL POLICY: 8 (2): 161-180 (2019)
Abstract
Environmental externalities call for the use of environmental taxes to
get prices right and thereby reduce environmental pressures. To date,
however, the Spanish government makes only limited use of environmental
taxes. One major reason for the policy reluctance are concerns on the
regressive impacts of environmental taxes. We argue that policy can
hedge against these concerns by means of revenue recycling. More
specifically, we assess the impacts of a green tax reform where
additional revenues are redistributed lump-sum to Spanish households on
an equal-per-capita basis. Based on quantitative evidence from coupled
micrasimulation and computable equilibrium analyses we find that such a
green tax reform leads to a substantial reduction in harmful emissions
while having a progressive impact.