The Life and Death of the Dutch Groundwater Tax
Wageningen UR - School of Social Sciences
Wageningen UR - Environmental Economics and Natural Resources Group; PERC - Property and Environment Research Center
May 16, 2013
PERC Research Paper No. 12/12
We examine the Dutch national groundwater tax (GWT) --- a "win-win, green" tax that promised to reduce distortions by simultaneously reducing the income tax burden and improving environmental outcomes. We find no evidence of those impacts. Instead, we see that the GWT increased distortions by taxing a narrow base (a few drinking water companies reliant on raw groundwater) and interfering with groundwater management programs funded by an existing provincial groundwater fee. The Dutch government revoked the GWT for being fiscally inefficient and environmentally unhelpful on December 31 2011, but this story provides some useful lessons.
Number of Pages in PDF File: 15
Keywords: Green tax, groundwater, Pigouvian tax, fiscal policy, regulation
JEL Classification: H23, Q28, Q56working papers series
Date posted: April 23, 2012 ; Last revised: May 16, 2013
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