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- Title
Tax competition in the presence of environmental spillovers.
- Authors
Antoniou, Fabio; Hatzipanayotou, Panos; Michael, Michael S.; Tsakiris, Nikos
- Abstract
This paper examines the efficiency of destination-and origin-based consumption taxes, in the presence of consumption generated perfect cross-border pollution spillovers, when tax revenue either finances public pollution abatement or it is lump-sum distributed. When consumption tax revenue finances the provision of public pollution abatement and regions have identical and quasi-linear preferences then, the non-cooperative equilibrium origin-based consumption taxes are efficient, while the destination-based consumption taxes are inefficiently low. When, however, consumption tax revenue is lump-sum distributed, then, the destination-based tax principle leads to inefficiently low taxes, while the origin-based tax principle leads either to inefficiently high or low taxes.
- Subjects
PUBLIC finance; TRANSBOUNDARY pollution; PUBLIC spending; TAXATION
- Publication
International Tax & Public Finance, 2022, Vol 29, Issue 3, p600
- ISSN
0927-5940
- Publication type
Article
- DOI
10.1007/s10797-021-09680-3