Abstract
Environmental issues have become more important worldwide. A carbon tax is a strong tool for cutting carbon emissions directly through the internalization of the external costs of pollution. To mitigate the impact of carbon taxation, it is necessary to recycle the tax revenue into other taxes, subsidies, and transfers. In Taiwan, carbon tax policy has been under consideration. To analyze the effect of carbon tax and tax revenue recycling, this paper adopts a recursive dynamic computable general equilibrium (CGE) model—General Equilibrium Model for Energy, Environment, and Technology (GEMEET)—under a comprehensive economic systems framework. The results show that a suitable recycling mechanism is a key factor for the success of green tax reform for a significant improvement in the economy, environment, and in income distribution, simultaneously.
Highlights
Energy is the driving force for economic activity
In order to access the impact of the carbon tax and its corresponding measures on economic development, the environment, and income distribution under a comprehensive economic system framework, this paper employs a dynamic computable general equilibrium (CGE) model for Taiwan, which has been widely applied to the analysis and research on climate change policy from the past few years
Carbon tax is a powerful tool for cutting carbon emissions directly through the internalization of the external cost of pollution
Summary
Energy is the driving force for economic activity. the carbon emissions from energy may lead global warming to affect humankind and the environment. Sustainability 2020, 12, 1530 tax revenue can be re-distributed by different means, such as income tax reduction, direct transfer, production tax deduction (in the bottom of Figure 1) These schemes can boost industry transactions to resources. Tax revenue can be re-distributed by different means, such as income tax reduction, direct transfer, production tax deduction (in the bottom of Figure 1) These schemes can boost industry transactions to offset the damage resulting from a carbon tax. In order to access the impact of the carbon tax and its corresponding measures (tax revenue recycling) on economic development, the environment, and income distribution under a comprehensive economic system framework, this paper employs a dynamic computable general equilibrium (CGE) model for Taiwan, which has been widely applied to the analysis and research on climate change policy from the past few years.
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