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Taxing bads by taxing goods : pollution control with presumptive charges (English)

Solving environmental problems, in both developing and industrial countries, appears to be more challenging than merely applying a fee on polluters. The purpose of this book is to show that indirect instruments designed to reduce the scale of output can be important complementary measures in a cost-effective pollution control program. Examples of such instruments are taxes on output or on polluting inputs, called presumptive because their target is the pollution presumed to be associated with the activity. A combination of the two types - those that reduce output and those that reduce emissions per unit of output - can mimic fairly well the effect of an optimal emission fee without the latter's monitoring requirements. A recurring theme throughout the book is that taxation of fuel use can be a powerful indirect instrument for controlling air pollution because of the association between fuel use and emissions. In sum, the authors advocate taxing a "bad" (pollution) by taxing goods (fuels) as part of a program to address air pollution when monitoring of emissions is prohibitively expensive. Chapter I lays out the authors' basic analytical framework. Chapter II treats the case of mobile-source pollution through an examination of gasoline taxes and regulatory policies in Mexico City. Chapter III addresses point-source pollution and the potential for altering the fuel mix in industries in Indonesia and Chile, based on firm-level data. A general equilibrium model of Indonesia portrays the economywide consequences of changes in fuel taxes. Finally, chapter IV contains some concluding remarks.

Details

  • Author

    Eskeland, Gunnar S. Devarajan, Shantayanan

  • Document Date

    1996/01/31

  • Document Type

    Publication

  • Report Number

    15490

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Chile,

    Indonesia,

    Mexico,

  • Region

    East Asia and Pacific, Latin America & Caribbean,

  • Disclosure Date

    2010/07/01

  • Doc Name

    Taxing bads by taxing goods : pollution control with presumptive charges

  • Keywords

    economics of pollution control;effects on income;Gasoline Tax;large number of vehicle;costs of emission reduction;retail price of gasoline;investments in transport infrastructure;choice of travel mode;air pollution control policy;marginal utility of income;emission coefficient for gasoline;control of costs;gasoline tax rate;pollution control agency;gasoline consumption;demand reduction;income distribution effects;elasticity of demand;reduction in emission;emission control technology;air pollution reduction;social marginal cost;gasoline price increase;marginal welfare cost;cost of goods;air pollution problem;measurement emission;liquefied petroleum gas;compressed natural gas;poor rural household;public transport policy;volatile organic compound;taxation gasoline;emission reduction program;costs to producer;marginal social cost;point of departure;cost of abatement;classification of vehicle;travel mode choice;tax rate change;demand for gasoline;pollution abatement technologies;differences in emission;fossil fuel burning;tax and regulation;form of regulation;term of dollar;pollution control objectives;unleaded gasoline;emission rate;emission factor;catalytic converter;demand elasticity;indirect instrument;welfare costs;cleaner car;incentive scheme;emission tax;presumptive tax;health benefit;demand curve;demand management;cumulative emission;emission standard;consumption pattern;mass transport;cleaner technology;abatement level;parking fee;individual polluters;vapor pressure;confidence interval;broken line;private vehicle;vehicle fleet;marginal change;special treatment;domestic sewage;program consisting;fuel price;price elasticity;external costs;fuel market;demand function;input tax;emission fee;private transport;private cost;tax increase;tax change;apply system;social return;residential development;efficiency gain;detailed examination;information base;special requirements;personal vehicle;car market;horizontal axis;solid line;tax bill;production system;energy strategies;real cost;local jurisdiction;carbon monoxide;driving cycle;average emission;welfare economics;efficiency considerations;cloud cover;polluter-pays principle;tea plantation;standard deviation;high-income household;fuel efficiency;incentive problem;high share;important policy;household behavior;simulation model;vehicle inspection;empirical findings;tradable emission;regulatory restriction;urban zone;geographic area;marginal increase;light-duty truck;market-based mechanisms;license plate;aggregate control;reduction effort;total emissions;abatement technology;panel data;empirical literature;long-term elasticity;income elasticity;supply curve;cost minimization;public revenue;marginal production;alternative supplier;emission testing;fuel tax;gasoline demand;gasoline supply;reduction pollution;producer price;diesel reformulation;tax base;lump-sum transfer;distortionary tax;fixed coefficient;health effect;ad valorem;production cost;social planner;behavioral change;dispersion model;consumer welfare;policy stance;environmental regulation;blunt instrument;premature mortality;point estimate;air pollutant;point source;audit regime;population exposure;price change;sulfur oxide;nitrogen oxide;pollutant control;conservative assumption;utilization rate;ozone reduction;tax proceeds;partial derivative;output level;cost structure;environmental standard;equilibrium point;carbon dioxide;relative price;co2 emission;urban transport;human waste;presumptive taxation;enforcement cost;hypothetical scenario;ideal system;cost curve;consumption level;emergency measure;parking policy;emission permit;regulatory measure;demand schedule;unit price;private household;market price;tax revenue;market force;marginal price;

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Citation

Eskeland, Gunnar S. Devarajan, Shantayanan

Taxing bads by taxing goods : pollution control with presumptive charges (English). Directions in development Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/640531468743156024/Taxing-bads-by-taxing-goods-pollution-control-with-presumptive-charges