Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128452
Authors: 
Parry, Ian
Vollebergh, Herman R. J.
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5749
Abstract: 
The efficiency case for raising fuel tax minima under the EU Energy Tax Directive (ETD) appears nuanced. Some fuels may be undertaxed (e.g., road diesel, natural gas), while others may be adequately taxed already (e.g., gasoline). Reform proposals would increase some minima, including for road diesel and natural gas, while leaving that for gasoline unchanged. This is a step in the right direction, though the climate, fiscal, health, and net economic benefits are limited. There are potentially much larger gains from extending tax minima to fuels (especially coal) covered by the EU Emissions Trading System (if the cap is tightened). Two-speed systems (with lower minima for low-income countries) may improve political acceptability, while sacrificing little in terms of climate benefits. Under higher, but still plausible, environmental damage assumptions than used here, there is a case for reviving ETD reform, whatever its exact structure.
Subjects: 
energy tax directive
climate
tax floor
efficiency
JEL: 
Q54
Q58
H23
Document Type: 
Working Paper

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