15 Pages Posted: 4 Jan 2012
Date Written: January 2012
A pollution tax or emissions trading scheme places a price on greenhouse gas emissions. This price also is an additional indirect tax and a government revenue windfall. To restore distributional equity, to avoid compounding the efficiency costs of existing distorting taxes and to maintain macroeconomic stability, it is argued that most of the revenue windfall be recycled to households as lower income tax rates and higher social security payments. As the carbon price rises over time, new and larger tax mix change packages will be required.
Keywords: greenhouse gasses, pollution, taxation reform
Suggested Citation: Suggested Citation
Freebairn, John W., Tax Mix Change to Reduce Greenhouse Gas Emissions (January 2012). Australian Journal of Agricultural and Resource Economics, Vol. 56, Issue 1, pp. 102-116, 2012. Available at SSRN: https://ssrn.com/abstract=1979264 or http://dx.doi.org/10.1111/j.1467-8489.2011.00559.x
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