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Environmentally related taxes and their influence on decarbonization of the economy

Authors :
Olena Dobrovolska
Swen Günther
Olga Chernetska
Natalia Dubrova
Svitlana Kachula
Source :
Environmental Economics, Vol 15, Iss 1, Pp 174-189 (2024)
Publication Year :
2024
Publisher :
LLC "CPC "Business Perspectives", 2024.

Abstract

Environmental taxes ensure sustainable development, but their fiscal and environmental effectiveness differs for countries with different socio-economic characteristics. This study aims to compare the impact of environmental tax revenues on economy’s decarbonization (measured through carbon productivity – the ratio of GDP to carbon dioxide emissions) in different countries, considering their green technologies development and carbon emissions. The paper analyzed OECD and World Bank statistical data for 38 OECD countries for 2002–2021 using linear panel regression models with fixed and random effects (using Hausman test and STATA 18). To identify explicit and latent patterns of this influence, which are common to certain countries, this analysis did not consider each country separately but targeted clusters, distinguished by Ward and Sturges methods based on the effective tax rate on carbon emissions, total environmental tax revenues, total carbon emissions, and carbon productivity. The positive influence of environmental tax revenues on the economy’s decarbonization level has been confirmed for 29 countries (four from six clusters). The effect is the largest for the USA (an increase in tax revenues by 1% leads to an increase in carbon productivity by 0.9% on average) and the smallest – for the cluster including Austria, Belgium, Canada, Costa Rica, Czechia, Estonia, France, Germany, Hungary, Iceland, Korea, Lithuania, New Zealand, Poland, Portugal, Slovakia, Spain, and the Great Britain (increase – 0.1%). The negative impact was confirmed for nine countries (two from six clusters): Denmark, Finland, Israel, Latvia, and Sweden (decrease – 0.3%) and Greece, Italy, the Netherlands, and Slovenia (decrease – 0.21%).

Details

Language :
English
ISSN :
19986041 and 1998605X
Volume :
15
Issue :
1
Database :
Directory of Open Access Journals
Journal :
Environmental Economics
Publication Type :
Academic Journal
Accession number :
edsdoj.6db0178a8d3d44fd81c6e3b9a7ce8ad5
Document Type :
article
Full Text :
https://doi.org/10.21511/ee.15(1).2024.13