Environmental Tax Reform and Economic Welfare.

摘要

According to a new study EPI (2012), India has the worst air pollution in the entire world. Given the severe damages caused by air pollution, it is important to explore various options to control air pollution. In chapter 1, I use a computable general equilibrium (CGE) model to show that a Pigouvian tax on the use of fossil fuels with cuts in existing distortionary taxes could have double dividend in India. In addition, the fuel tax policy is also progressive. Alternative Pigouvian tax on output of pollution intensive commodities has a positive effect on economic growth, but it achieves only a modest reduction in air pollution. This tax policy does not have a significant distributive impact.;Chapter 2 presents a new econometric model of aggregate demand for urban India. I create inter-area consumer price indices for India and combine them with a nationally representative consumer expenditure survey to estimate the model. The consumer expenditure data allows for substantial demographic heterogeneity. I estimate a flexible model of aggregate demand known as Translog model in the literature and report estimated model parameters, cross price elasticities and expenditure elasticities. The model is able to explain the patterns of aggregate demand in urban India and it can be useful in general equilibrium models to evaluate macro-economic impacts of a broad range of policies. The results of such general equilibrium models will be more realistic if they incorporate flexible functional form such as the one presented in the chapter.;In chapter 3, I evaluate the impact of three revenue neutral environmental tax policies — carbon tax, fuel tax and output tax — on consumer welfare in India. I take the results of my CGE simulations to household data to estimate the welfare impacts of the environmental policies. Demographic attributes such as household size, the education the age of household head affect the expenditure patterns and thus the individual welfare effects. As for the aggregate welfare, the impact of pollution taxes is generally very modest compared to the improvement in environment as measured by reduction in health damages due to air pollution. The output tax policy seems to offer double dividends, because the output tax policy works as a tax reform rather than an additional burden on consumers. The output tax is mildly regressive, but other policies could be mildly progressive or regressive depending on the measure of progression used.