Abstract

AbstractThis paper examines the likely immediate impact effect of some pollution taxes on the tax burden of households in a number of European countries. The total effect on households of such taxes is assessed using input–output analysis. Thus both the direct effect of taxes, through increased fuel prices, and the indirect effect, through increased prices of other goods, can be assessed simultaneously. This input–output approach allows the generation of direct plus indirect pollution intensities for all household consumption categories, for, in principle, a number of pollutants (CO2, SO2, NOx, particulates). These intensities could then be used to assess the impact on households of pollution taxes. This paper concentrates on CO2 and energy, performing a static analysis of the effect of a tax on the carbon or energy content of goods using the known consumption patterns for the various countries, both in aggregate and for different income groups. This allows a first assessment of the regressive/progressive effects of such taxes and an indication of consumer welfare loss. Copyright © 2002 John Wiley & Sons, Ltd and ERP Environment.

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