Distributional Impacts of Energy Taxes

33 Pages Posted: 10 Apr 2017 Last revised: 20 Mar 2022

See all articles by William A. Pizer

William A. Pizer

Duke University

Steven Sexton

Duke University Sanford School of Public Policy

Date Written: April 2017


Despite popularity among economists for their efficiency, energy pollution taxes enjoy less political support than standards-based regulation because of common perceptions that they burden the poor relative to the rich. However, the literature on pollution tax incidence and consumption surveys in Mexico, the United Kingdom, and the United States, suggest energy taxes need not be as regressive as often assumed. This paper demonstrates that the incidence of such taxes varies according to the energy commodities that are taxed, the physical, social and climatic characteristics of jurisdictions in which they are implemented, and how the revenue is used. It is also shown that the variation in household energy expenditure within income groups is greater than variation across income groups in many cases. These horizontal equity impacts are reviewed, as are their implications for policy making.

Suggested Citation

Pizer, William A. and Sexton, Steven, Distributional Impacts of Energy Taxes (April 2017). NBER Working Paper No. w23318, Available at SSRN: https://ssrn.com/abstract=2949642

William A. Pizer (Contact Author)

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Steven Sexton

Duke University Sanford School of Public Policy ( email )

201 Science Drive
Box 90312
Durham, NC 27708-0239
United States

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