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A note on pollution and reforms of domestic and trade taxes toward uniformity

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  • Takumi Haibara

    (Aichi University)

Abstract

This note revisits the work of Michael and Hatzipanayotou (ITPF 20: 753–768, 2013), who show that price-neutral indirect tax reforms increase welfare and revenue via a reduction in either production pollution or consumption pollution. This note shows instead that an indirect tax reform can reduce both of these emissions while increasing government revenue. The key point is that tax rates should be adjusted to preserve aggregate demand or aggregate output. Such a reform strategy has a broader set of options for addressing distortions and renders consumption and production choices more environmentally friendly.

Suggested Citation

  • Takumi Haibara, 2022. "A note on pollution and reforms of domestic and trade taxes toward uniformity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(1), pages 201-214, February.
    • Handle: RePEc:kap:itaxpf:v:29:y:2022:i:1:d:10.1007_s10797-021-09659-0
    DOI: 10.1007/s10797-021-09659-0
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    References listed on IDEAS

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    1. Haibara, Takumi, 2012. "Alternative approaches to tax reform," Economics Letters, Elsevier, vol. 117(2), pages 408-410.
    2. Hatzipanayotou, Panos & Michael, Michael S. & Miller, Stephen M., 1994. "Win-win indirect tax reform : A modest proposal," Economics Letters, Elsevier, vol. 44(1-2), pages 147-151.
    3. Hatta, Tatsuo & Haltiwanger, John, 1986. "Tax Reform and Strong Substitutes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 303-315, June.
    4. Emran, M. Shahe, 2005. "Revenue-increasing and welfare-enhancing reform of taxes on exports," Journal of Development Economics, Elsevier, vol. 77(1), pages 277-292, June.
    5. Michael Michael & Panos Hatzipanayotou, 2013. "Pollution and reforms of domestic and trade taxes towards uniformity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(5), pages 753-768, October.
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    Cited by:

    1. Gökhan Güven, 2024. "The effects of resource export and import taxes on resource conservation and welfare outcomes: triple win or loss reconsidered," Economic Change and Restructuring, Springer, vol. 57(4), pages 1-53, August.

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    More about this item

    Keywords

    Alternative-reform strategies; Production and consumption generated pollution;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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