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The postponement of 2012 VAT Law implementation means that the higher tax revenues expected from the measure will be delayed, and additional sources of revenue need to be considered. Model simulations suggest that implementation of the VAT Law starting July 1, 2017 at the originally proposed rate of 15 percent would have yielded additional tax revenue of about 1 percent of GDP in FY2018, and 0.8 percent of GDP in FY2019. Several measures could be considered to make up this short-fall. Automation and process simplification could bring additional tax revenues ranging from 0.3 to 0.7 percent of GDP in FY2018. There is substantial scope for efficiency gains in shifting from a type-of-tax towards a function-based tax administration, facilitating compliance. Carbon taxes could generate resources equivalent to 1 percent of GDP, and tobacco taxes could raise a further 1 to 2 percent of GDP. Rationalizing tax incentives and exemptions can also generate more revenue. The proposed administrative measures, including expanding tax withholding mechanisms, would not require legislative changes and could be implemented in the short term, boosting revenue during the current fiscal year (FY2018). The other tax policy measures could be considered for implementation in the medium term and would require corresponding legislative initiatives.

This paper reviews the main transmission channels of an environmental tax reform shifting the tax burden from labor to carbon emission. The analysis uses a simple open-economy macro model and estimates dynamic environmental tax as well as personal income tax multiplier effects on output and employment for a panel of 75 high- and low-income countries from 1994 to 2018. Tax policy changes are identified by cyclically adjusting the tax revenues. The estimated environmental tax multiplier effects on output range from 1 on impact to 1.8 at the peak. Personal income tax multipliers are slightly higher, ranging from 1.4 to 2.3. While income taxes reduce employment, environmental taxes do not. Environmental tax multipliers are highly regime dependent: they are close to zero or statistically insignificant unless taxes are increased when output contracts, fuel prices are high, the environmental tax levels are high, or the carbon intensity of output is low. Commodity trade-exposed countries face higher tax multipliers. This analysis concludes that, compared with income taxes, environmental taxes can be a less contractionary source of revenues to support the post-COVID-19 fiscal consolidation efforts, especially in countries that are at the beginning of their decarbonization efforts.

Industry plays a very important role in India economic growth. India currently became the third highest emission producer in the world. According its Nationally Determined Contribution on Paris Agreement, India committed to reduce emission intensity of its GDP by 35% by 2030 from 2005 level. Using Global Trade Analysis Project ��� Energy (GTAP-E) model simulation, this paper attempts to provide an estimation of industrial changes in India due to its pledge on Paris Agreement. The result indicate that some industries have an increase and decrease on their production even though the tax raises.

Environmental and Resource Economics, 60 (2) ISSN:0924-6460 ISSN:1573-1502

This paper examines the distributional impacts of a $50 tax per ton of CO2. Using Input-Output tables we calculate the carbon intensity of goods to estimate households’ carbon footprints. Findings indicate the tax is regressive. Using the revenue to reduce taxes on labor leaves 60 percent of people worse off, while rebating the revenue in equal dividends increases welfare for 55 percent of individuals, including 84 percent in the bottom half of the distribution. Many economists have dismissed dividends on efficiency grounds, but we show that potential macroeconomic benefits of tax cuts are insufficient to protect the poor.

Abstract The taxation of externalities is the subject of this first of seven chapters that examine potential sources of development funding. It considers the possible role of environmental taxes for economic development. The chapter starts with a review of the welfare economics theory of environmental taxation in a single closed economy (analytical details are provided in an appendix A). The different sections then discuss alternatives to taxes as instruments of environmental policy, considering both fixed and transferable quotas; review the double dividend issue; consider the extent to which distributional concerns should be reflected in the design of environmental policy; take up some special problems in the application of environmental externalities to developing economies; extend the analysis from the single country case to the case of global externalities, where each individual country is affected by the environmental pollution of all other countries (the discussion is with specific reference to the carbon tax, and a formal analysis in the context of a two‐country model is given in a second appendix); consider the political economy of global environmental taxes, by comparing alternative tax designs with regard to the equity‐efficiency trade‐off; discuss some practical problems of tax collection; and evaluate the revenue potential of environmental taxes with special reference to the carbon tax.

This paper takes a dive into the deep literature on the carbon tax accumulated through active and continuous research over the past 30 years. It also presents the ongoing debate and implementation of the carbon tax in practice. The paper discusses the evolution of the carbon tax literature, classifying it by the issues investigated and methodology used for the investigation. It finds that the literature enlightens four key issues: (i) economic impacts, (ii) choices for revenue recycling, (iii) distributional implications, and (iv) competitiveness and border tax adjustment. Quantitative analysis, especially computable general equilibrium modeling, is the main method employed in the literature. The study shows that potential adverse economic impacts and competitiveness concerns are the main impediments to the introduction of the carbon tax. Extensive examinations of carbon tax issues at the global, regional, and country levels have led to innovative measures to address these concerns. While the carbon tax was mainly a subject of academic discussion until few years back, it has generated good attention for policy makers, particularly after the Paris Agreement on climate change, and is being considered as one of the main market instruments to address global climate change. Although several important issues related to the carbon tax have been well researched, its potential interactions with poverty and shared prosperity are yet to be investigated.