Working Paper: NBER ID: w23318
Authors: William A. Pizer; Steven Sexton
Abstract: Despite popularity among economists for their efficiency, energy pollution taxes enjoy less political support than standards-based regulation because of common perceptions that they burden the poor relative to the rich. However, the literature on pollution tax incidence and consumption surveys in Mexico, the United Kingdom, and the United States, suggest energy taxes need not be as regressive as often assumed. This paper demonstrates that the incidence of such taxes varies according to the energy commodities that are taxed, the physical, social and climatic characteristics of jurisdictions in which they are implemented, and how the revenue is used. It is also shown that the variation in household energy expenditure within income groups is greater than variation across income groups in many cases. These horizontal equity impacts are reviewed, as are their implications for policy making.
Keywords: No keywords provided
JEL Codes: H22; Q41; Q48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| energy taxes (H23) | household expenditures (D12) |
| energy taxes (H23) | regressivity (H23) |
| geographic location (R12) | household energy expenditures (D10) |
| energy consumption behaviors (Q41) | household energy expenditures (D10) |
| energy taxes (H23) | equitable outcomes (D63) |
| socioeconomic characteristics (R23) | incidence of energy taxes (H22) |
| type of energy commodity taxed (Q40) | regressivity (H23) |