Abstract
According to optimal taxation theory, raw materials should be taxed to capture the embedded scarcity rent in their value. To reduce both natural resource use and the corresponding emissions, or the throughput in the economic system, the best policy may be a tax on material inputs. As a first approach to throughput taxation, this paper considers a tax on intermediates in the framework of a dynamic computable general equilibrium model with environmental feedbacks. To balance the budget, payroll taxes are reduced. As a result, welfare indicators as material consumption and leisure time consumption are reduced, while on the other hand all the environmental indicators improve.
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Bruvoll, A., Ibenholt, K. Green Throughput Taxation: Environmental and Economic Consequences. Environmental and Resource Economics 12, 387–401 (1998). https://doi.org/10.1023/A:1008234017015
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DOI: https://doi.org/10.1023/A:1008234017015