IDEAS home Printed from https://ideas.repec.org/p/cgd/wpaper/541.html
   My bibliography  Save this paper

Why Do Governments Tax or Subsidize Fossil Fuels?

Author

Listed:
  • Paasha Mahdavi

    (University of California, Santa Barbara)

  • Cesar B. Martinez-Alvarez

    (University of California, Los Angeles)

  • Michael L. Ross

    (University of California, Los Angeles)

Abstract

Governments have long faced pressure to address the climate crisis by increasing taxes on fossil fuels, which are the source of more than three-quarters of the world’s anthropogenic carbon pollution. Since fossil fuel taxes and subsidies are hard to measure, it is unclear how much government policies have changed. Using original high-frequency data on gasoline taxes and subsidies in 157 countries, we establish three ï¬ ndings: despite rising alarm about climate change, from 2003 to 2015 there was little net change in fuel taxes and subsidies at a global level; fuel taxes and subsidies appear to be driven by slow-moving economic factors, primarily income and fossil fuel wealth; and reforms, when they occur, are overwhelmingly associated with country-level political conditions that follow no readily-discernible patterns. These patterns are consistent with a model in which fossil fuel taxes are determined by a country’s income and revenue needs, not its environmental commitments.

Suggested Citation

  • Paasha Mahdavi & Cesar B. Martinez-Alvarez & Michael L. Ross, 2020. "Why Do Governments Tax or Subsidize Fossil Fuels?," Working Papers 541, Center for Global Development.
    • Handle: RePEc:cgd:wpaper:541
    as

    Download full text from publisher

    File URL: https://www.cgdev.org/publication/why-do-governments-tax-or-subsidize-fossil-fuels?utm_source=repec&utm_medium=referral&utm_campaign=repec
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paul Fenton Villar, 2022. "Is there a Mineral-Induced ‘Economic Euphoria’?: Evidence from Latin America," Journal of Happiness Studies, Springer, vol. 23(4), pages 1403-1430, April.

    More about this item

    Keywords

    Gasoline taxes; carbon taxes; fossil fuel subsidies; tax reform; climate policy; environmental politics; political economy;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cgd:wpaper:541. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publications Manager (email available below). General contact details of provider: https://edirc.repec.org/data/cgdevus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.