Abstract:

I study the optimal alternative to a carbon tax using already existing taxes in the economy and its impact on inequality. I find that there exists an alternative first-best to the standard carbon tax. Under this alternative, the carbon tax on energy production is replaced by either taxes on energy consumption or taxes on inputs. Taxes on inputs used in the energy sector act as a substitute to income taxes: the government can choose between making households bear the environmental tax burden or to indirectly tax the energy producer. In the latter case, the final good sector can be partly subsidised. Studying the optimal Ramsey fiscal policy, a consumption tax is needed along the carbon tax as long as the social and private gains of increasing energy consumption relatively to final good consumption are unequal. There also exists an alternative to carbon taxation in which firms are taxed on their inputs. In this case, income tax rates vary. Alternatives to carbon taxation do not affect inequality in the first-best.

About the SEEMS Seminars

Over the past years the number of researchers at UvA Economics & Business that work on Environmental Economics and Sustainability has increased significantly. To provide a natural meeting place for them, we have started a series of Seminars on Environmental Economics and Management of Sustainability (SEEMS).

The series’ first main goal is to increase the visibility of Environmental Economics and the Management of Sustainability at UvA and the visibility of UvA within these fields. Its second main goal is to give PhD candidates working on topics in these fields access to the frontier of knowledge, and to provide them with a training ground where they can present and discuss their ideas.

Are you interested?

This will be a hybrid seminar. If you are interested in joining this seminar, please send an email to the secretariat of ASF at asf-feb@uva.nl.