Like any tax, the VAT is vulnerable to evasion and fraud. But its credit and refund mechanism offers unique opportunities for abuse, and this has recently become an urgent concern in the European Union (EU). This paper describes the main forms of noncompliance distinctive to a VAT, considers how they can be addressed, and assesses evidence on their extent in high-income countries. While the practical signifi cance of current diffi culties in the EU should not be overstated, administrative measures alone may prove insuffi cient to deal with them, and a fundamental redesign of the VAT treatment of intra-community trade may be required. The current diffi culties in the EU largely refl ect circumstances that would not apply in the U.S.

No abstract

This chapter provides an overview of key economic issues in the use of taxation as an instrument of environmental policy in the UK. It first reviews economic arguments for using taxes and other market mechanisms in environmental policy, discusses the choice of tax base, and considers the value of the revenue from environmental taxes. It is argued that environmental tax revenues do not significantly alter economic constraints on tax policy, and that environmental taxes need to be justified primarily by the cost-effective achievement of environmental goals. The chapter then assesses key areas where environmental taxes appear to have significant potential -including taxes on energy used by industry and households, road transport, aviation, and waste. In some of these areas, efficient environmental tax design needs to make use of a number of taxes in combination -a "multi-part instrument".

No abstract

No abstract

The UK’s Climate Change Programme introduced an Emissions Trading Scheme (ETS) for greenhouse gases. Firms in over 40 industrial sectors which have negotiated “Climate Change Agreements” setting quantitative energy efficiency targets can use the ETS to trade over-and under-compliance with these targets. In parallel, a limited number of firms have become major participants in the ETS as a result of an auction of subsidies for additional abatement commitments. The paper describes the UK arrangements and assesses the economic efficiency and environmental effectiveness of the ETS, drawing on evidence of participants’ behaviour both in the incentive auction, and in subsequent trading. Copyright Springer Science+Business Media, Inc. 2007Emissions trading, Tradeable permits, Auctions, Market efficiency, Greenhouse gas abatement, Climate change policies,

I. ENERGY TAXATION AND ENERGY EFFICIENCYOver the past three years, policy towards the taxation of energy has been debated vigorously. In 1991 the European Commission proposed a new carbon/energy tax as part of a package of measures intended to reduce energy use and to help the Community meet international targets for reducing emissions of carbon dioxide and other 'greenhouse gases'. This would have applied to both domestic and industrial users of energy and motor fuels. Also, in the area of UK domestic policy, the Chancellor's 1993 Budget announced the phased extension of the standard rate of value added tax to domestic energy, which had hitherto been zero-rated in the UK. The extension of standard-rate VAT to domestic energy was primarily motivated by the need for increased tax revenues, but, at the same time, the Government maintained that the measure would have the valuable byproduct of reducing energy consumption, and hence contributing to achievement of targets for reducing greenhouse gas emissions.One common issue raised by both the proposed EC carbon/energy tax and the extension of VAT to domestic fuel is the likely distributional impact. Domestic energy forms a much larger part of the budgets of poorer households than of those of the population as a whole; Crawford, Smith and Webb (1993) show that 1 Stephen Smith is Deputy

No abstract