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Tax mix change to reduce greenhouse gas emissions

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  • Freebairn, John

Abstract

A pollution tax or emissions trading scheme places a price on greenhouse gas emissions. This price also is an additional indirect tax and a government revenue windfall. To restore distributional equity, to avoid compounding the efficiency costs of existing distorting taxes and to maintain macroeconomic stability, it is argued that most of the revenue windfall be recycled to households as lower income tax rates and higher social security payments. As the carbon price rises over time, new and larger tax mix change packages will be required.

Suggested Citation

  • Freebairn, John, 2012. "Tax mix change to reduce greenhouse gas emissions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(1), pages 1-15, March.
    • Handle: RePEc:ags:aareaj:204171
    DOI: 10.22004/ag.econ.204171
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    Cited by:

    1. Frank Jotzo, 2011. "Carbon Pricing that Builds Consensus and Reduces Australia's Emissions: Managing Uncertainties Using a Rising Fixed Price Evolving to Emissions Trading," CCEP Working Papers 1104, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.

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