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Green Tax Reform in Australia in the Presence of Improved Environment-Induced Productivity Gain: Does It Offer Sustainable Recovery from a Post-COVID-19 Recession?

Author

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  • Maruf Rahman Maxim

    (Northern Institute, Charles Darwin University, Casuarina, NT 0810, Australia)

  • Kerstin K. Zander

    (Northern Institute, Charles Darwin University, Casuarina, NT 0810, Australia)

Abstract

Disasters and pandemics such as COVID-19 will change the world in many ways and the road to redemption from the ongoing economic distress may require a novel approach. This paper proposes a path towards economic recovery that keeps sustainability at the forefront. A computable general equilibrium model is used to simulate different green tax reform (GTR) policies for triple dividend (TD), consisting of lower emissions, higher GDP and higher employment. The GTR design consists of an energy tax coupled with one of three tax revenue recycle methods: (i) reduction of payroll tax, (ii) reduction of goods and services tax (GST) and (iii) a mixed-recycling approach. The paper also presents the impact of higher productivity on the tax reform simulations, which is a possible positive externality of lower emissions. The study is based on the Australian economy and the salient findings are twofold: (i) productivity gain in the GTR context improves the GDP and employment outcomes in all three different simulation scenarios and (ii) GST reduction has the highest TD potential, followed by reduction of payroll tax.

Suggested Citation

  • Maruf Rahman Maxim & Kerstin K. Zander, 2020. "Green Tax Reform in Australia in the Presence of Improved Environment-Induced Productivity Gain: Does It Offer Sustainable Recovery from a Post-COVID-19 Recession?," Sustainability, MDPI, vol. 12(16), pages 1-18, August.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:16:p:6514-:d:397991
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    2. P. Ebin Babu & Riya Mary, 2022. "Exploring the Research Trends in Green Tax: Bibliometric Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 12(6), pages 157-162, November.
    3. Weijiang Liu & Tingting Liu & Yangyang Li & Min Liu, 2021. "Recycling Carbon Tax under Different Energy Efficiency Improvements: A CGE Analysis of China," Sustainability, MDPI, vol. 13(9), pages 1-17, April.
    4. Ema Gusheva & Vincent de Gooyert, 2021. "Can We Have Our Cake and Eat It? A Review of the Debate on Green Recovery from the COVID-19 Crisis," Sustainability, MDPI, vol. 13(2), pages 1-16, January.
    5. Dzyuba, Yu. & Bakalova, I., 2023. "CGE models for resource-based economy: A comprehensive bibliometric analysis," Journal of the New Economic Association, New Economic Association, vol. 61(4), pages 12-50.

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