Carbon tax and revenue recycling: Impacts on households in British Columbia

Beck, Marisa; Rivers, Nicholas; Wigle, Randall; Yonezawa, Hidemichi

doi:10.1016/j.reseneeco.2015.04.005

Cited by 176 publications

(68 citation statements)

References 19 publications

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“…A State can decide to Bshift the tax burden from employment, income and investment, to pollution, resource depletion and waste^as proposed by UNEP (UNEP 2015, 183) or to keep the consumption tax revenue unchanged, or even to reduce it. The State can also decide to introduce the shift Bslowly, over a couple of decades^ (UNEP 2015, 183) or to implement it more quickly as it has been the case with carbon tax in British Columbia, where the initial rate 10 CAN $/tCO 2 eq fixed in 2008 has been increased annually by 5 CAN $/tCO 2 eq per year during 4 years to reach 30 CAN $/tCO 2 eq in 2012 (Beck et al 2015).…”

Section: Respect For National Sovereigntymentioning

confidence: 99%

“…This view is, however, contested as the efficiency of the consumption taxes enables public authorities to implement compensation and redistribution schemes (Bankman and Weisbach 2005;Decoster et al 2010;Corbacho et al 2013). Those schemes are in particular needed in the case of the development of environmental consumption taxes (Ekins and Dresner 2004;West and Williams 2004;Büchs et al 2011;Kosonen 2012;Dissou and Siddiqui 2014;Beck et al 2015;Yusuf and Resosudarmo 2015). In the DaVAT framework, the important thing to keep in mind is that the increase in most polluting products' prices is associated with a decrease in the price of the (most numerous) low-polluting products previously subject to VAT, which has redistributive properties.…”

Section: Acceptability Of the Proposalmentioning

confidence: 99%

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From value-added tax to a damage and value-added tax partially based on life cycle assessment: principles and feasibility

Timmermans

Achten

2018

Int J Life Cycle Assess

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Purpose The purpose of this article is to examine the arguments in favor of a shift from value-added tax (VAT) or sales tax to a damage and value-added tax (DaVAT) partially based on the life cycle assessment (LCA) of goods and services. With this shift, goods and services that seriously harm the environment and human health will be priced up, those that impact them less will be priced down. The paper recalls the proposal made by De Camillis and Goralczyk (Int J Life Cycle Assess 18: [263][264][265][266][267][268][269][270][271][272] 2013) to differentiate the VAT rate associated with products according to their environmental impacts over their life cycle. The paper suggests a new way to convert VAT into DaVAT, examines the operating principles of such a system, and considers its practical feasibility. The new policy tool based on LCA presented is intended to be applied to every country wishing to reform its consumption tax system in order to strive for a more sustainable future. Some aspects specific to countries having the same currency, notably the Euro zone, are also discussed. Methods The proposal of De Camillis and Goralczyk is discussed from the perspective of both environmental performance and compliance with LCA standards. To overcome the identified difficulties, a new way of adapting VAT (or consumption taxes in general) according to LCA is suggested. The proposal relies on three essential points: (i) apply VAT (or consumption taxes in general) to all goods and services and reduce its multiple rates to one single low rate (e.g., 3%) called uniform VAT (UVAT); (ii) add to UVAT a per-unit tax called global damage tax (GDT) calculated on the basis of environmental impacts assessed by means of specific or generic LCAs. In the case of potentially high-polluting products or industries, a specific LCA will be automatically imposed. The obligation to assess high-polluting activities already exists in many countries with, e.g., environmental impact studies, but the impacts are not necessarily evaluated by LCA; (iii) in order to reflect environmental, social, or ethical concerns specific to a country, another damage tax termed specific damage tax (SDT) is proposed that extends beyond LCA. DaVAT is the sum of UVAT, GDT, and SDT. DaVAT is conceived not as an additional burden but rather as a shift of taxation, as the rate of the old consumption taxes can decrease proportionally to the increase of GDT. DaVAT is also designed in such a way that the erosion of tax revenues, when pollutant would decline, is offset by the extension of the tax to all goods and services and by the possibility to gradually re-increase the UVAT rate when the number of highly polluting products decreases. Results and discussion The proposal is examined first from a theoretical point of view by considering which principles should be used to comply with LCA standards and general requirements of (environmental) tax policies. Four general principles emerge: consistency in the choice of the functional unit and in the characterization, n...

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Section: Respect For National Sovereigntymentioning

confidence: 99%

Section: Acceptability Of the Proposalmentioning

confidence: 99%

From value-added tax to a damage and value-added tax partially based on life cycle assessment: principles and feasibility

Timmermans

Achten

2018

Int J Life Cycle Assess

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“…British Columbia recycled proceedings of its carbon tax both in redistribution and in a reduction of conventional taxes. The result was an estimated small macroeconomic cost and a progressive incidence (Beck et al, 2015). When governments engage in this type of reform, it is important for political acceptability that they communicate it adequately (Harrison, 2012).…”

Section: Carbon Pricing As a Fiscal Instrumentmentioning

confidence: 99%

Climate Policies and Nationally Determined Contributions: Reconciling the Needed Ambition with the Political Economy

Vogt-Schilb

Hallegatte

2017

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Countries have pledged to stabilize global warming at a 1.5 to 2°C increase. Either target requires reaching net zero emissions before the end of the century, which implies a major transformation of the economic system. This paper reviews the literature on how policymakers can design climate policies and their Nationally Determined Contributions (NDCs) to reach zero-net emissions before the end of the century in a socially and politically-acceptable manner. To get the ambition right, policymakers can use sectoral roadmaps with targets and indicators that track progress towards zero emissions (e.g. regarding renewable power or reforestation). Indeed, monitoring economy-wide emissions reductions alone would not ensure that short-term action contributes meaningfully to the long-term decarbonization goal. To get the political economy right, climate policies can be designed so that they contribute to nonclimate objectives and create coalitions of supporters. For instance, revenues from carbon taxes can fund social assistance and infrastructure investment, while reducing tax evasion and informality. To minimize social and economic disruptions and avoid stranded assets, policymakers can start with a low carbon price level and use complementary policies. Designed at the sector level, complementary policies such as performance standards or feebates for cars, building norms, or moratoriums on new coal power plants can be negotiated in partnership with local stakeholders and trigger a transition to zero carbon without creating disruptive stranded assets.

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“…While this understanding is important in its own right, it is of added benefit when one considers revenue 'recycling' measures to redistribute carbon tax receipts via the tax-benefit system [2,6]. Existing revenue recycling mechanisms and associated analyses have focussed on providing a progressive post-redistribution pattern of incidence [2,6,11,19], showing that many redistributive mechanisms yield a net benefit for many income groups in aggregate. Despite this pattern of incidence, losers may still prevail.…”

Section: Introductionmentioning

confidence: 99%

“…Advances in this field have generally focussed on incorporating further sources of emission or incorporating a behavioural response to price changes. Indirect consumption of CO 2 embedded in goods and services has been incorporated through integration with an input-output or CGE model [2,7,11,21,24,26,38,43]. [23] analyse the distributional effects of taxing multiple greenhouse gases.…”

Section: Introductionmentioning

confidence: 99%

What Factors Drive Inequalities in Carbon Tax Incidence? Decomposing Socioeconomic Inequalities in Carbon Tax Incidence in Ireland

Farrell

2017

Ecological Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in

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Carbon tax and revenue recycling: Impacts on households in British Columbia

Cited by 176 publications

References 19 publications

From value-added tax to a damage and value-added tax partially based on life cycle assessment: principles and feasibility

From value-added tax to a damage and value-added tax partially based on life cycle assessment: principles and feasibility

Climate Policies and Nationally Determined Contributions: Reconciling the Needed Ambition with the Political Economy

What Factors Drive Inequalities in Carbon Tax Incidence? Decomposing Socioeconomic Inequalities in Carbon Tax Incidence in Ireland

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