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- Title
Distortionary, Non-Distortionary, and Distributional Properties of Environmental Taxes: Extension of Sandmo's Observation.
- Authors
Page, Talbot; Qinghua Zhang
- Abstract
We find a limited parallel between lump-sum taxes and environmental taxes. Corollary 2, which extends Sandmo's observation, shows that appropriated corrective revenues have the same non-distortionary effects as lump-sum taxes, the result reducing to the original observation when the appropriated corrective revenues meet the revenue need and achieve first-best efficiency with other taxes set at zero. Corollary 1 finds that when the corrective part of environmental taxes is used as marginal damage compensation, the non-corrective part is distortionary and symmetric with ordinary proportional labor taxes in second-best equilibria. The extension of Sandmo's observation suggests that environmental taxes may be among the least distortionary taxes in the tax system.
- Subjects
ENVIRONMENTAL impact charges; POLLUTION control costs; ENVIRONMENTAL impact charges laws; ENVIRONMENTAL law; ENVIRONMENTAL policy
- Publication
Annals of Economics & Finance, 2006, Vol 7, Issue 1, p191
- ISSN
1529-7373
- Publication type
Abstract