Tax Mix Change to Reduce Greenhouse Gas Emissions

15 Pages Posted: 4 Jan 2012  

John W. Freebairn

University of Melbourne - Department of Economics

Date Written: January 2012

Abstract

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

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

John W. Freebairn (Contact Author)

University of Melbourne - Department of Economics ( email )

Victoria 3010, 3010
Australia

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