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Competiveness effects of environmental tax reforms

Objective

The project will undertake an analysis of the competitiveness impacts of green tax reforms at a sectoral level,using modelling frameworks (bottom-up and macro-economic) as well as case studies concerning the existing tax reforms which have taken place in the EU and Candidate countries.The overall perspective is ex-post, in that actual experiences will feed the models, rather than uncertain ex-ante expectations, and this basic perspective constitutes one of the important in novative aspects of the proposal.Conceptual clarification of the competitiveness issue, as well as a concise review of environmental tax reform experience will kick off the project.Five to eight industrial subsectors will be selected on basis of data availability for comparative analysis, and the impact of tax reform designs in six to seven member and accession states be considered.The world market conditions for the particular sectors will be studied carefully so as to identify different degrees of vulnerability.Short-run impacts will be examined via a conventional bottom-up modelling framework, while a more dynamic modelling framework based on the E3ME model of Cambridge Econometrics will be applied to examine both short and long run effects with particular emphasis on competitiveness.It capture inter-industry and other indirect effects, as well as those international competitiveness effects, which cannot be easily accounted for using the bottom-up approach.The goal is to compare short and long-term costs of environmental tax reform.The dynamics of employment, output, external trade and investment in capital and R&D will be tracked along various reform scenarios. A specific analysis of environmental decoupling and the possibility of carbon leakage is carried out.Finally mitigation practices are considered in light of both modelling results and the more qualitative insights provided by case studies on the specific tax reforms and on the world market conditions in specific sectors.

Call for proposal

FP6-2002-SSP-1
See other projects for this call

Coordinator

DANMARKS MILJOEUNDERSOEGELSER
EU contribution
No data
Address
Frederiksborgvej 399
ROSKILDE
Denmark

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Total cost
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Participants (5)