The Macroeconomic Effects of Environmental Taxes: A Closer Look at the Feasibility of “Win-Win” Outcomes

Author/Editor:

Jenny E Ligthart

Publication Date:

May 1, 1998

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper reviews recent literature on the macroeconomic effects of environmental taxes. It attempts to delineate the conditions under which a cleaner environment is compatible with attaining macroeconomic objectives, such as more employment and economic growth. The analysis reveals that an environmentally motivated fiscal reform—using the revenues from environmental taxes to cut labor taxes—may yield employment and environmental dividends if the tax burden can be shifted to agents outside the labor market, such as capitalists, transfer recipients, and foreigners. A cleaner environment and a higher rate of economic growth go hand in hand if the environment is considered an important public input into production.

Series:

Working Paper No. 1998/075

Subject:

Environment Environmental policy Environmental taxes Labor taxes Natural resources Taxes

English

Publication Date:

May 1, 1998

ISBN/ISSN:

9781451849707/1018-5941

Stock No:

WPIEA0751998

Pages:

35

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