Reforming the Tax System to Promote Environmental Objectives: An Application to Mauritius

40 Pages Posted: 12 Jun 2011

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Date Written: June 2011

Abstract

Fiscal instruments are potentially among the most effective, and cost-effective, options for addressing externalities related to poor air quality, urban road congestion, and greenhouse gases. This paper takes a case study, focused on Mauritius (a pioneer in the use of green taxes) to illustrate how existing taxes, especially on fuels and vehicles, could be reformed to better address these externalities. We discuss, in particular, an explicit carbon tax; a variety of options for reforming vehicle taxes to meet environmental, equity, and revenue objectives; and a progressive transition to usage-based vehicle taxes to address congestion

Keywords: Climatic changes, Energy sector, Energy taxes, Environmental policy, Greenhouse gas emissions, Mauritius, Tax policy, Tax reforms, Tax systems, Taxation

Suggested Citation

Parry, Ian W. H., Reforming the Tax System to Promote Environmental Objectives: An Application to Mauritius (June 2011). IMF Working Paper No. 11/124, Available at SSRN: https://ssrn.com/abstract=1861794

Ian W. H. Parry (Contact Author)

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