Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries

Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries

This paper reviews the main transmission channels of an environmental tax reform shifting the tax burden from labor to carbon emission. The analysis uses a simple open-economy macro model and estimates dynamic environmental tax as well as personal income tax multiplier effects on output and emp...

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Main Author: Schoder, Christian
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2021
Subjects:
ENVIRONMENTAL TAX
INCOME TAX
TAX MULTIPLIER
REGIME DEPENDENCE
CARBON TAX
GREENHOUSE GAS EMISSIONS
Online Access:http://documents.worldbank.org/curated/en/595141619447698449/Regime-Dependent-Environmental-Tax-Multipliers-Evidence-from-75-Countries
http://hdl.handle.net/10986/35520
id okr-10986-35520
recordtype oai_dc
spelling okr-10986-355202022-09-20T00:09:16Z Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries Schoder, Christian ENVIRONMENTAL TAX INCOME TAX TAX MULTIPLIER REGIME DEPENDENCE CARBON TAX GREENHOUSE GAS EMISSIONS This paper reviews the main transmission channels of an environmental tax reform shifting the tax burden from labor to carbon emission. The analysis uses a simple open-economy macro model and estimates dynamic environmental tax as well as personal income tax multiplier effects on output and employment for a panel of 75 highand low-income countries from 1994 to 2018. Tax policy changes are identified by cyclically adjusting the tax revenues. The estimated environmental tax multiplier effects on output range from 1 on impact to 1.8 at the peak. Personal income tax multipliers are slightly higher, ranging from 1.4 to 2.3. While income taxes reduce employment, environmental taxes do not. Environmental tax multipliers are highly regime dependent: they are close to zero or statistically insignificant unless taxes are increased when output contracts, fuel prices are high, the environmental tax levels are high, or the carbon intensity of output is low. Commodity trade-exposed countries face higher tax multipliers. This analysis concludes that, compared with income taxes, environmental taxes can be a less contractionary source of revenues to support the post-COVID-19 fiscal consolidation efforts, especially in countries that are at the beginning of their decarbonization efforts. 2021-04-29T14:35:40Z 2021-04-29T14:35:40Z 2021-04 Working Paper http://documents.worldbank.org/curated/en/595141619447698449/Regime-Dependent-Environmental-Tax-Multipliers-Evidence-from-75-Countries http://hdl.handle.net/10986/35520 English Policy Research Working Paper;No. 9640 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ENVIRONMENTAL TAX
INCOME TAX
TAX MULTIPLIER
REGIME DEPENDENCE
CARBON TAX
GREENHOUSE GAS EMISSIONS
spellingShingle ENVIRONMENTAL TAX
INCOME TAX
TAX MULTIPLIER
REGIME DEPENDENCE
CARBON TAX
GREENHOUSE GAS EMISSIONS
Schoder, Christian
Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries
relation Policy Research Working Paper;No. 9640
description This paper reviews the main transmission channels of an environmental tax reform shifting the tax burden from labor to carbon emission. The analysis uses a simple open-economy macro model and estimates dynamic environmental tax as well as personal income tax multiplier effects on output and employment for a panel of 75 highand low-income countries from 1994 to 2018. Tax policy changes are identified by cyclically adjusting the tax revenues. The estimated environmental tax multiplier effects on output range from 1 on impact to 1.8 at the peak. Personal income tax multipliers are slightly higher, ranging from 1.4 to 2.3. While income taxes reduce employment, environmental taxes do not. Environmental tax multipliers are highly regime dependent: they are close to zero or statistically insignificant unless taxes are increased when output contracts, fuel prices are high, the environmental tax levels are high, or the carbon intensity of output is low. Commodity trade-exposed countries face higher tax multipliers. This analysis concludes that, compared with income taxes, environmental taxes can be a less contractionary source of revenues to support the post-COVID-19 fiscal consolidation efforts, especially in countries that are at the beginning of their decarbonization efforts.
format Working Paper
author Schoder, Christian
author_facet Schoder, Christian
author_sort Schoder, Christian
title Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries
title_short Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries
title_full Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries
title_fullStr Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries
title_full_unstemmed Regime-Dependent Environmental Tax Multipliers : Evidence from 75 Countries
title_sort regime-dependent environmental tax multipliers : evidence from 75 countries
publisher World Bank, Washington, DC
publishDate 2021
url http://documents.worldbank.org/curated/en/595141619447698449/Regime-Dependent-Environmental-Tax-Multipliers-Evidence-from-75-Countries
http://hdl.handle.net/10986/35520
_version_ 1764483204896522240

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