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Neutral carbon tax and environmental targets in Brazil

Author

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  • Paula Carvalho Pereda
  • Andrea Lucchesi
  • Carolina Policarpo Garcia
  • Bruno Toni Palialol

Abstract

We evaluate the effects of a carbon tax in the Brazilian economy using an input–output framework. First, we consider the impacts of a carbon tax of US$ 10 and US$ 50/metric ton of CO2 equivalent. As usual, the adoption of the carbon tax generates adverse effects on GDP, wages and jobs in the short term, but reduces emissions and generates new government revenues, especially in the case of the greater tax. Second, we consider a broader tax system reform. In this reform, we replace distortionary taxes by a tax on value added. To compensate for the loss of government revenue, we assume a carbon tax with equivalent revenue. We find that the net effect is a GDP increase of 0.47%, the creation of 533 thousand jobs and reduction of 1.6 million tons of CO2 emissions. Both scenarios exempt exports and levy imports to correct adverse effects on the country’s competitiveness.

Suggested Citation

  • Paula Carvalho Pereda & Andrea Lucchesi & Carolina Policarpo Garcia & Bruno Toni Palialol, 2019. "Neutral carbon tax and environmental targets in Brazil," Economic Systems Research, Taylor & Francis Journals, vol. 31(1), pages 70-91, January.
    • Handle: RePEc:taf:ecsysr:v:31:y:2019:i:1:p:70-91
    DOI: 10.1080/09535314.2018.1431611
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    Cited by:

    1. Liu, Jicheng & Lu, Yunyuan, 2022. "Research on the evaluation of China's photovoltaic policy driving ability under the background of carbon neutrality," Energy, Elsevier, vol. 250(C).
    2. Moz-Christofoletti, Maria Alice & Pereda, Paula Carvalho, 2021. "Winners and losers: the distributional impacts of a carbon tax in Brazil," Ecological Economics, Elsevier, vol. 183(C).
    3. Lingli Qi & Lei Zhao & Yongqiang Zhang & Shiqi Jiang & Xinyue Lin & Yishuai Ren, 2024. "Computable general equilibrium analysis of neutral carbon trading scheme and revenue recycling impacts on income distribution in China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    4. 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.

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