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Introducing Carbon Taxes in Russia: The Relevance of Tax-Interaction Effects

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  • Orlov Anton

    (Department of Agricultural and Food Policy (420a), Universität Hohenheim, Schloß, 70599 Stuttgart, Germany)

  • Grethe Harald

    (Department of Agricultural and Food Policy (420a), Universität Hohenheim, Schloß, 70599 Stuttgart, Germany)

Abstract

The theoretical literature on the double-dividend concept is mainly focused on pre-existing distortionary taxes in the labour and capital markets; the relevance of interactions with other taxes is often neglected. Using an analytical model and a numerical general equilibrium model, we analyse the welfare effects of carbon taxes and their interaction with other taxes applied in Russia. We find that substituting carbon taxes for labour taxes in Russia can substantially reduce the cost of carbon taxation compared to returning carbon tax revenues to households in lump-sum form and can even result in welfare gains in Russia. In conclusion, introducing carbon taxes has an indirect corrective effect with respect to the distorting effect of export taxation on energy resources. Furthermore, welfare costs of carbon taxation can be significant under the assumption of perfect international mobility of capital. Nevertheless, the cost can be more than compensated in case of a high carbon trade price.

Suggested Citation

  • Orlov Anton & Grethe Harald, 2014. "Introducing Carbon Taxes in Russia: The Relevance of Tax-Interaction Effects," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(3), pages 723-754, July.
    • Handle: RePEc:bpj:bejeap:v:14:y:2014:i:3:p:32:n:5
    DOI: 10.1515/bejeap-2013-0006
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    References listed on IDEAS

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    Cited by:

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    2. Macdonald, Kevin & Patrinos, Harry Anthony, 2021. "Education Quality, Green Technology, and the Economic Impact of Carbon Pricing," GLO Discussion Paper Series 955, Global Labor Organization (GLO).
    3. Orlov, Anton & Aaheim, Asbjørn, 2017. "Economy-wide effects of international and Russia's climate policies," Energy Economics, Elsevier, vol. 68(C), pages 466-477.
    4. Orlov, Anton, 2017. "Distributional effects of higher natural gas prices in Russia," Energy Policy, Elsevier, vol. 109(C), pages 590-600.

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    More about this item

    Keywords

    carbon taxes; Russia; tax-interaction effects; double dividend;
    All these keywords.

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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