Integrated Reforms of Indirect Taxes in the Presence of Pollution

31 Pages Posted: 9 Apr 2008

See all articles by Michael S. Michael

Michael S. Michael

University of Cyprus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Sajal Lahiri

Southern Illinois University Carbondale - Department of Economics

Panos Hatzipanayotou

Athens University of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 1, 2008

Abstract

The literature on indirect tax reforms in pollution-ridden economies is quite limited. This paper, using a model of a small open economy with production and consumption generated pollution, considers the welfare implications of tax reforms within an integrated structure of consumption and production taxes. Specifically, both in the presence and absence of a binding government revenue constraint, we derive sufficient conditions for welfare improvement in the case where we implement (i) reforms in either production or consumption taxes, (ii) reforms in both consumption and production taxes and (iii) uniform changes in consumption taxes.

Keywords: indirect tax reforms, production and consumption generated pollution, welfare, government tax revenues

JEL Classification: H21, H23

Suggested Citation

Michael, Michael S. and Lahiri, Sajal and Hatzipanayotou (Xatzipanagiotou), Panagiotis (Panos), Integrated Reforms of Indirect Taxes in the Presence of Pollution (April 1, 2008). CESifo Working Paper Series No. 2276. Available at SSRN: https://ssrn.com/abstract=1118302

Michael S. Michael

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
357-22892433 (Phone)
357-22892432 (Fax)

HOME PAGE: http://www.econ.ucy.ac.cy/staff/michael.htm

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Sajal Lahiri

Southern Illinois University Carbondale - Department of Economics ( email )

MC 415
1000 Faner Drive
Carbondale, IL 62901
United States

Panagiotis (Panos) Hatzipanayotou (Xatzipanagiotou) (Contact Author)

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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