The Production and Consumption Accounting Principles as a Guideline for Designing Environmental Tax Policy

25 Pages Posted: 6 Feb 2007

Date Written: January 2007

Abstract

This paper evaluates two alternative tax policies aimed at reducing atmospheric pollutant emissions. One based upon an environmental tax that burdens directly firms' emissions, and the other one that burdens both directly and indirectly household consumption's emissions. Applying input-output approach, we reallocate the emissions generated in the economy according to the responsibility definition, i.e. the production or the consumption accounting principle. Afterwards, we analyse the effects on the products' prices of implementing an ad-quantum environmental tax based on the Producer Pays Principle (PPP) and/or on the User Pays Principle (UPP). The results obtained, show that both PPP and UPP environmental tax have the same effect on the final products' prices. However, the price of the intermediate products is only affected by the PPP environmental tax, whereas the UPP environmental tax keeps the prices unchanged.

Keywords: Input-Output Analysis, Environmental Taxes, Atmospheric Pollutants

JEL Classification: C67, H23, Q53

Suggested Citation

Serrano, Mònica, The Production and Consumption Accounting Principles as a Guideline for Designing Environmental Tax Policy (January 2007). FEEM Working Paper No. 8.2007, Available at SSRN: https://ssrn.com/abstract=960734 or http://dx.doi.org/10.2139/ssrn.960734

Mònica Serrano (Contact Author)

Universitat de Barcelona ( email )

Barcelona
Spain

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