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Title:The impact of a carbon tax on economic growth and carbon dioxide emissions in Ireland PDF Logo
Authors:Conefrey, Thomas
Gerald, John D. Fitz
Valeri, Laura Malaguzzi
Tol, Richard S. J.
Issue Date:2008
Series/Report no.:ESRI working paper 251
Abstract:This paper analyses the medium-term effects of a carbon tax on growth and CO2 emissions in Ireland, a small open economy. We find that a double dividend exists if the carbon tax revenue is recycled through reduced income taxes. If the revenue is recycled by giving a lump-sum transfer to households, a double dividend is unlikely. We also determine that a greater incidence of the carbon tax falls on capital than on labour. When combined with a decrease in income tax, there is a clear shift of the tax burden from labour to capital. Finally, most of the effect on the economy is due to changes in the competitiveness of the manufacturing and market services sectors. These results hold even if we allow changes in energy prices to have an enhanced (detrimental) effect on Ireland's competitiveness.
Subjects:carbon tax
Ireland
double dividend
tax incidence
JEL:H23
Q54
Document Type:Working Paper
Appears in Collections:ESRI Working Papers, The Economic and Social Research Institute (ESRI)

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