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Why Green Taxation

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  • Business and Environment
  • http://www.asb.dk/omos/institutter/departmentofeconomics/
According to economists solving environmental problems is simple. Politicians should simply impose a uniform tax on harmful emissions. However, the actual design of such green taxation shows that politicians do not follow their advice. CO2 taxation in OECD, for example, is highly differentiated and much in favour of industry. In fact, CO2 tax rates for industry are, on average, six times lower than those for households. We argue that the reason for this tax differentiation is that industry, in contrast to households, has a strong capability to lobby. Therefore, green taxation is effectively blocked and the desired environmental results are not being achieved. Why then is green taxation persistently applied in relation to industry? We argue that strong fiscal incentives drive this policy choice at the expense of environmental concerns because it allows environmental bureaucracies to budget-maximize.
Original languageEnglish
JournalEnergy & Environment
Volume1
Pages (from-to)29-38
Number of pages10
ISSN0958-305X
Publication statusPublished - 2001

    Research areas

  • Green taxation, Industry, Households, Fiscal, Bureaucracy, Budget maximization, HHÅ forskning

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