Performing an Environmental Tax Reform in a regional Economy. A Computable General Equilibrium

F.J. Andre, M.A. Cardenete, E. Velazquez

Research output: Working paperDiscussion paperOther research output

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Abstract

We use a Computable General Equilibrium model to simulate the effects of an Environmental Tax Reform in a regional economy (Andalusia, Spain).The reform involves imposing a tax on CO2 or SO2 emissions and reducing either the Income Tax or the payroll tax of employers to Social Security, and eventually keeping public deficit unchanged.This approach enables us to test the so-called double dividend hypothesis, which states that this kind of reform is likely to improve both environmental and non-environmental welfare.In the economy under analysis, an employment double dividend arises when the payroll tax is reduced and, if CO2 emissions are selected as environmental target, a (limited) strong double could also be obtained.No double dividend appears when Income Tax is reduced to compensate the environmental tax.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages33
Volume2003-125
Publication statusPublished - 2003

Publication series

NameCentER Discussion Paper
Volume2003-125

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Regional economy
Computable general equilibrium
Double dividend
Environmental tax reform
Payroll tax
Income tax
Social security
Tax
Environmental taxes
Spain
Computable general equilibrium model
Co2
Employers
Public deficit
Andalusia
CO2 emissions

Keywords

  • environmental tax
  • general equilibrium
  • regional economics
  • tax reform
  • dividends

Cite this

Andre, F. J., Cardenete, M. A., & Velazquez, E. (2003). Performing an Environmental Tax Reform in a regional Economy. A Computable General Equilibrium. (CentER Discussion Paper; Vol. 2003-125). Tilburg: Macroeconomics.
Andre, F.J. ; Cardenete, M.A. ; Velazquez, E. / Performing an Environmental Tax Reform in a regional Economy. A Computable General Equilibrium. Tilburg : Macroeconomics, 2003. (CentER Discussion Paper).
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Andre, FJ, Cardenete, MA & Velazquez, E 2003 'Performing an Environmental Tax Reform in a regional Economy. A Computable General Equilibrium' CentER Discussion Paper, vol. 2003-125, Macroeconomics, Tilburg.

Performing an Environmental Tax Reform in a regional Economy. A Computable General Equilibrium. / Andre, F.J.; Cardenete, M.A.; Velazquez, E.

Tilburg : Macroeconomics, 2003. (CentER Discussion Paper; Vol. 2003-125).

Research output: Working paperDiscussion paperOther research output

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Andre FJ, Cardenete MA, Velazquez E. Performing an Environmental Tax Reform in a regional Economy. A Computable General Equilibrium. Tilburg: Macroeconomics. 2003. (CentER Discussion Paper).