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Energy taxation, subsidy removal and poverty in Mexico

Author

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  • Labeaga, José M.
  • Labandeira, Xavier
  • López-Otero, Xiral

Abstract

Equity and efficiency are crucial issues behind any tax reform, but they are particularly relevant in countries with high inequality and large shares of poverty. This paper provides a comprehensive socio-economic empirical assessment of Mexico's proposed (and partially implemented) tax reforms in the energy domain, and of a hypothetical partial removal of existing electricity subsidies. Using a rich household income and expenditure survey within the context of a demand system adjustment of non-durable goods, the article provides the public-revenue, environmental and distributional impacts from the simulation of different combinations of energy taxation, subsidy-removal and distributive offsets. The paper also provides detailed ex-ante evidence on the effects of compensatory devices that may contribute to the successful implementation of energy reform packages and significant poverty alleviation in Mexico.

Suggested Citation

  • Labeaga, José M. & Labandeira, Xavier & López-Otero, Xiral, 2021. "Energy taxation, subsidy removal and poverty in Mexico," Environment and Development Economics, Cambridge University Press, vol. 26(3), pages 239-260, June.
    • Handle: RePEc:cup:endeec:v:26:y:2021:i:3:p:239-260_3
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    Citations

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    Cited by:

    1. Rossella Bardazzi & Maria Grazia Pazienza & Maria Eugenia Sanin, 2022. "Energy practices and population cohorts: the case of Mexico," SN Business & Economics, Springer, vol. 2(11), pages 1-22, November.
    2. Alberto Gago & Xavier Labandeira & José M. Labeaga & Xiral López Otero, 2021. "Transport Taxes and Decarbonization in Spain: Distributional Impacts and Compensation," Hacienda Pública Española / Review of Public Economics, IEF, vol. 238(3), pages 101-136, September.
    3. Xu, Shang & Zhang, Jun, 2023. "The welfare impacts of removing coal subsidies in rural China," Energy Economics, Elsevier, vol. 118(C).

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