New Green Tax Reforms: Ex-Ante Assessments for Spain

Xavier Labandeira,Xiral López-Otero,José M Labeaga

doi:10.3390/su11205640

Xavier Labandeira, Xiral López-Otero + Show 1 more

Open Access

https://doi.org/10.3390/su11205640

Copy DOI

Abstract

The great recession brought an increased need for public revenues and generated distributive concerns across many countries. This has led to a new generation of green tax reforms characterized by the use of markedly heterogeneous proposals that, overall, share a more flexible use of tax receipts adapted to the new economic environment. This article explores the possibilities of implementing this new generation of green tax reforms in Spain. It analyzes the impact of such reforms on energy demand, emissions, public revenues and income distribution from taxing various energy-related environmental damages and by considering two alternative uses for the tax receipts: fiscal consolidation and funding the costs of renewable-energy support schemes.

Highlights

Energy taxes have traditionally been used for revenue purposes, as a consequence of the low price elasticity of energy products in general, which allows taxes on these products to be a high and stable source of collection
At European Union (EU) level, successive attempts to increase energy taxation were blocked by different countries due to the unanimity fiscal rule, the European Commission recently published a communication demanding the lift of unanimity for fiscal legislation on energy and the environment [9], which could facilitate the adoption of a new directive in this area
This article aims to analyze the effects of a third-generation green tax reform in Spain by introducing environmental taxes on the main energy products and two alternative uses for tax revenues: fiscal consolidation and the financing of the cost of supporting renewable energy

Summary

Introduction

Energy taxes have traditionally been used for revenue purposes, as a consequence of the low price elasticity of energy products in general (see [1]), which allows taxes on these products to be a high and stable source of collection. Since the early 1990s, the incorporation of environmental objectives has gradually become common practice in most countries [2] and, given that many of the environmental problems we currently face are directly or indirectly related to energy, especially in the case of climate change (see [3,4,5]), there has been an increase in the use of energy taxes with environmental purposes. At European Union (EU) level, successive attempts to increase energy taxation (see [7,8]) were blocked by different countries due to the unanimity fiscal rule, the European Commission recently published a communication demanding the lift of unanimity for fiscal legislation on energy and the environment [9], which could facilitate the adoption of a new directive in this area (to substitute the outdated EU fiscal rules from the early years of the century)

Objectives

Methods

Conclusion