Btu tax as a revenue option: Its impact on agriculture in the USA

The paper investigates the impact of the imposition of a broadly based energy tax on the US economy in general and the agricultural sectors in particular. The analytical approach used in the analysis consisted of a general equilibrium model composed of 12 producing sectors, 13 consuming sectors, six household categories, classified by income, and the government. The effects of a 10 cents per million Btu tax on energy on prices and quantities are examined. The results are revealing. For example, a 10 cents per million Btu tax on energy imposed at the point of production would result in lower output by the producing sectors (by about $9.154 billion), an increase in the consumption of goods and services (by about $20.292 billion), and a reduction in welfare (by about $4.30 billion). The government would realize an increase in revenue of about $6.356 billion. If the Btu tax were imposed at the point of consumption, there would be lower output by the producing sectors (by about $5.88 billion), an expansion in the consumption of goods and services (by about $19.830 billion), and a reduction in welfare (by about $7.066 billion). The government would realize an increase in revenue of $6.688 billion. The agricultural sectors would be minimally impacted. For example, if a 10 cents per million Btu tax were imposed at the point of production, output in the program crops sector would rise (by $8.3 million), output in the livestock sector would decline (by $83 million), output in the all-other-agriculture-commodities sector would be reduced (by $118 million), and output in the forestry sector would rise (by $34.7 million). If the Btu tax were imposed at the point of consumption, output in the program crops sector would fall (by $38 million), output in the livestock sector would decline (by $42 million), output in the all other agriculture commodities sector would be reduced (by $94 million), and output in the forestry sector would rise (by $221 million).     

The impact of the proposed reduction in the motor fuels excise tax in the United States

The analysis in this paper examines the impact of reducing the excise tax on gasoline and diesel fuel on the United States economy. The analytical approach used in the analysis consists of a computable general equilibrium model composed of fourteen producing sectors, fourteen consuming sectors, six household categories classified by income and a government. The effects of a 4·3 cents per gallon reduction in the excise tax on gasoline and diesel fuel on prices and quantities are examined. The results suggest, for example, a decrease in the tax would result in higher output by the producing sectors (by about $2·86 billion), a expansion in the consumption of goods and services (by about $3·48 billion), and an increase in welfare (by about $3·59 billion). The government would realize a decrease in revenue of about $2·37 billion. When subjected to a sensitivity analysis, the results are reasonably robust with regard to the assumption of the values of the substitution elasticities. © 1997 John Wiley & Sons, Ltd.     

Assessing the impact of the windfall profits tax on the US economy

The paper focuses on the effect that the elimination of the windfall profits tax (WPT) on crude oil would have on the various producing sectors, consuming sectors and household categories in the USA, where the interrelationships between these entities are explicitly considered. Special attention is given to the agricultural sectors of the economy. Thus, in the context of a general equilibrium model, the effect of the elimination of the WPT on the producing sectors in general and the three agricultural sectors plus forestry in particular, on the consuming sectors, on households and on the Government is calculated. Over the period 1984–1990, such a policy initiative would result in higher output by the non-crude-oil producing sectors (by about $1.783 billion), higher consumption of goods and services (by about $1.651 billion), and an increase in welfare (by about $1.625 billion). The Government will realize a decrease in revenue of about $1.362 billion while the domestic crude oil industry will experience an increase in output of approximately $1.217 billion. For the agricultural sectors, output overall will fall. Specifically, for the programme crops sector, output will decline by $39 million, for the livestock sector, output will fall by $14 million, for all other agricultural commodities, output will decline by $36 million and for forestry, output will be reduced by $29 million. Attendant on these reductions in output will be lower prices for the respective commodities.     

An assessment of the energy tax burden on the Philippine economy

This paper uses an aggregate modelling approach to assess the impacts of a redistribution of the taxes and duties that currently exist on crude oil and refined petroleum products in the Philippine economy. The approach used in the analysis consists of a general equilibrium model composed of fourteen producing sectors, fourteen consuming sectors, three household categories classified by income and a government. The effects of replacing the taxes and duties on crude oil and refined petroleum products with a more broad-based tax on manufacturing and service sectors output on prices and quantities are examined. The results are revealing. For example, the consequences of redistributing the tax burden away from petroleum products to the manufacturing and service sectors of the Philippine economy would be an increase in output by all producing sectors of about 3.5% or about 2.4 hundred billion Philippine pesos, a rise in the consumption of goods and services by about 6.1% or 1.6 hundred billion Philippine pesos, a rise in total utility by 6.9% or 1.9 hundred billion Philippine pesos and virtually no change in tax revenue for the government. When subjected to a sensitivity analysis, the results are reasonably robust with regard to the assumption of the values of the substitution eleasticities. That is, while the model's equilibrium values do vary in response to different assumptions of the values of these elasticities, the fluctutations are not so enormous to suggest that the model is unrealistically sensititve to these parameters.     

Tracking global carbon revenues: A survey of carbon taxes versus cap-and-trade in the real world

We investigate the current use of public revenues which are generated through both carbon taxes and cap-and-trade systems. More than $28.3 billion in government “carbon revenues” are currently collected each year in 40 countries and another 16 states or provinces around the world. Of those revenues, 27% ($7.8 billion) are used to subsidize “green” spending in energy efficiency or renewable energy; 26% ($7.4 billion) go toward state general funds; and 36% ($10.1 billion) are returned to corporate or individual taxpayers through paired tax cuts or direct rebates. Cap-and-trade systems ($6.57 billion in total public revenue) earmark a larger share of revenues for “green” spending (70%), while carbon tax systems ($21.7 billion) more commonly refund revenues or otherwise direct them towards government general funds (72% of revenues). Drawing from an empirical dataset, we also identify various trends in systems’ use of “carbon revenues” in terms of the total revenues collected annually per capita in each jurisdiction and offer commensurate qualitative observations on carbon policy design choices.     

Energy taxation and the double dividend effect in Taiwan's energy conservation policy—an empirical study using a computable general equilibrium model

Faced with pressure from greenhouse gas reductions and energy price hikes, the Taiwan government is in the process of developing an energy tax regime to reflect environmental external costs and effectively curb energy consumption, as well as mitigate CO₂ emissions through an adequate pricing system. This study utilizes a CGE model to simulate and analyze the economic impacts of the draft Energy Tax Bill and its complementary fiscal measures. Under the assumption of tax revenue neutrality, the use of energy tax revenue generated for the purpose of reducing income tax is the best choice with double dividend effects since it will effectively stimulate domestic consumption and investment, and, consequently, mitigate the negative impacts of the distortionary tax regime. The double dividend effect is less significant, however, when the supplementary measures being used are for government expenditure. Nevertheless, all supplementary measures have effectively reduced energy consumption, which means they have delivered at least the first dividend—in the sense of CO₂ emissions control. It has been verified in this study that having adequate public-finance policy measures is the key to realizing the double dividend effect.     

Modelling the impacts of a carbon emission-differentiated vehicle tax system on CO2 emissions intensity from new vehicle purchases in Ireland

The increasing awareness of the effects of climate change on the environment and the economic pressure on oil supply has focused international attention on reducing CO₂ emissions and energy usage across all sectors. In order to meet their Kyoto protocol commitments and in line with European Union policy, the Irish government has introduced a carbon-based tax system for new vehicles purchased from the 1st of July 2008. This new legislation aims to reduce carbon emissions in the transport sector, a sector which is responsible for a significant proportion of both. This paper presents the results of the development, calibration, and application of a car choice model which predicts the changes in CO₂ emissions intensity from new vehicle purchases as a result of the changes in vehicle tax policy and fuel price in Ireland. The model also predicts the impact of such changes on tax revenue for the Irish government and the changes in the split between the number of diesel and petrol vehicles purchased. The investigation found that the introduction of these new carbon-based taxes in Ireland will result in a reduction of 3.6–3.8% in CO₂ emissions intensity and a reduction in annual tax revenue of €191 M.     

Should we drill in the Arctic National Wildlife Refuge? An economic perspective

This paper provides model-based estimates of the value of oil in Alaska's Arctic National Wildlife Refuge (ANWR). The best estimate of economically recoverable oil in the federal portion of ANWR is 7.06 billion barrels of oil, a quantity roughly equal to US consumption in 2005. The oil is worth $374 billion ($2005), but would cost $123 billion to extract and bring to market. The difference, $251 billion, would generate social benefits through industry rents of $90 billion as well as state and federal tax revenues of $37 billion and $124 billion, respectively. A contribution of the paper is the decomposition of the benefits between industry rents and tax revenue for a range of price and quantity scenarios. But drilling and development in ANWR would also bring about environmental costs. These costs would consist largely of lost nonuse values for the protected status of ANWR's natural environment. Rather than estimate these costs and conduct a benefit–cost analysis, we calculate the costs that would generate a breakeven result. We find that the average breakeven willingness to accept compensation to allow drilling in ANWR ranges from $582 to $1782 per person, with a mean estimate of $1141.     

Impact of government subsidies on market penetration of synthetic fuels

This paper assesses the impacts of various levels of government subsidies on the degree of US dependency on imported energy for the period 1977–2001 and on the reduction of energy bills under the ‘base case’, ‘conservation’, and ‘most likely’ scenarios using the Gulf/SRI US energy model. If the US government subsidizes synfuel production by 50 cents/MMBtu (10⁶ Btu), total synthetic fuel production and market penetration could be 15·1–16·9 quads (10¹⁵ Btu) in 2001 against 8·3–9·8 quads given no subsidy. This will result in a reduction of oil and gas imports by 3·8–4·3 quads by 2001. The analyses indicate that during the period 1977–2001, for every 1 MMBtu desired reduction in imported oil, each MMBtu of synfuel produced should be subsidized by $1.50–1.88.     

Taxing pollution and profits: A bargaining approach

This paper analyzes the taxation of polluting firms in a model where the government and firms bargain over emissions and profits taxes. We demonstrate that under reasonable assumptions, the bargaining position of firms is a determinant of the profits tax yet has no impact on the emissions tax. The emissions tax is affected by market structure, firm technologies, and environmental awareness. An emissions tax may not be imposed in some circumstances, although it would raise public revenue and reduce pollution. In that case, the transfer of profits taxes to people can be used to address their environmental suffering. We then extend the model to consider that the government spends a fraction of tax revenue to partner with firms in pollution abatement. Public environmental spending will increase with the demand for polluting goods and facilitate a cut in the emissions tax, which leads to a higher output level and less abatement effort at firms.     

Reduction of fossil fuel emissions in the USA: A holistic approach towards policy formulation

In the United States, the response of the federal government to the global initiative of reduction of emissions of CO₂ has been limited. With the Kyoto Protocol having entered into force in February 2005, there will be renewed international pressure on the United States for action. Concurrently, the US economy, growing modestly, is characterized by large current account and budget deficits. This situation calls for garnering additional revenue through repealing of the recent tax cuts. An option available is to impose a modest carbon tax. The rationale of such a tax is that it would address the twin objectives of additional revenue and reduction of emissions.     

Plug-in vehicles and the future of road infrastructure funding in the United States

In the United States, road infrastructure funding is declining due to an increase in fuel efficiency and the non-adjustment of fuel taxes to inflation. Legislation to tax plug-in vehicles has been proposed or implemented in several states. Those propositions are contrary to policies to promote fuel efficient vehicles. This paper assesses (1) the magnitude of the decline in federal fuel tax revenue caused by plug-in vehicles and (2) quantifies the revenue that could be generated from a federal plug-in vehicle registration fee. We find that the contribution of plug-in vehicles to the decline of the federal fuel tax revenue is at most 1.6% and the majority of the shortfall can be attributed to the non-adjustment of the fuel tax rate and the increase in vehicle fuel efficiency by 2040. An additional tax of $50–$200 per plug-in vehicle per year in the reference case would generate $188–$745 million in 2040 which represents an increase of 1.69–6.71% in federal fuel tax revenue compared to no tax. The lesson for policy makers is that plug-in vehicles do not contribute significantly to the funding shortfall in the short- and medium-run and a supplemental tax would generate a small percentage of additional revenue.     

能源补贴的类型、效果和策略

为了扶持尚处于弱势地位的新的能源生产类型和新消费方式,为了帮助承担过重社会责任的企业,有时为了减轻消费者的负担等,往往以国家财政对能源生产、消费进行补贴。恰当的补贴可促进能源生产的创新,引导节能环保的能源消费方式,但过多过长时间的补贴会削弱企业的竞争力。有时为了争抢补贴一哄而上会造成产业畸形发展,使政府和企业陷入被动和困境。对能源消费的多种补贴如长期持续并不断增大,不但不利于节能,还将造成日趋增大的政府赤字,最终影响经济发展和社会稳定。建议能源补贴应向科技研发倾斜、向各类开拓创新的新领域倾斜,对领取补贴的能源生产要以最终商品量考核。补贴量不宜过大、时间不应过长,尽量减少现金补贴、多用减税减负等方法创造更好的经营环境。总之,补贴是一种政府干预市场的行为,应该慎重从事。政府要考虑的不仅是该不该补贴,还要注意补贴的方式、力度、时间以及防止权力寻租和企业骗补等问题。     

A system dynamic model for production and consumption policy in Iran oil and gas sector

A system dynamic model is presented, which considers the feedback between supply and demand and oil revenue of the existing system in Iran considering different sectors of the economy. Also the export of the oil surplus and the injection of the gas surplus into the oil reservoirs are seen in the model by establishing a balance between supply and demand. In this model the counter-effects and existing system feedbacks between supply and demand and oil revenue can be seen considering different sectors of the economy. As a result, the effects of oil and gas policies in different scenarios for different sectors of Iran’s economy together with the counter-effects of energy consumption and oil revenue are examined. Three scenarios, which show the worst, base and ideal cases, are considered to find future trends of major variables such as seasonal gas consumption in power plants, seasonal injected gas in oil reservoirs, economic growth in the industrial sector, oil consumption in the transportation sector, industrial gas consumption and exported gas. For example, it is shown that the exported gas will reach between 500 and 620 million cubic-meter per day in different scenarios and export revenues can reach up to $500 billion by 2025.     

Effects of policy characteristics and justifications on acceptance of a gasoline tax increase

Many economists argue that increasing the gasoline tax is an effective way to reduce fuel consumption. Yet, public support for such a tax increase has been rather low among US residents. We performed eight survey experiments (total N approximately 3000) to examine how selected policy characteristics and persuasive messages influence support for a gasoline tax increase. Several policy characteristics significantly increased support for a gasoline tax increase. Having the increase phased in over five years modestly increased support. Compared with giving the extra revenue to the US Treasury’s General Fund, both refunding the extra revenue equally to all American families and having this revenue used for energy efficient transportation strongly increased support. Support for a gasoline tax increase was not affected by the nature of the mechanism to achieve revenue neutrality. Most people supported a 20 cent per gallon tax increase to repair roads and bridges. Explaining how the gasoline tax increase would reduce fuel consumption slightly increased support for a gasoline tax increase, but neither being informed of the high gasoline prices in other advanced industrial countries nor the actual pump price of gasoline at the time of the experiment influenced support for a gasoline tax increase.     

Quantitative analysis of energy-efficiency strategy on CO2 emissions in the residential sector in Japan – Case study of Iwate prefecture

This study examines the economics of energy-efficiency strategies for reducing CO₂ emissions in the residential sector in Japan from the perspective of regional characteristics. For this study, the residential sector in Iwate prefecture was selected as representative of rural areas in Japan. In order to promote purchases of energy-efficient consumer appliances, the prefectural government is presumed to reimburse purchasers a part of the cost difference between energy efficient and conventional appliances. This paper begins with a discussion of the prefecture’s financial support for purchasers of energy efficient appliances and assumes that the payments come from prefectural government funds. This paper then looks at the effect of a carbon-tax refund on the reduction of CO₂ emissions. The results show that, if half of the households use energy-efficient appliances, then CO₂ emissions in the residential sector in the year 2020 will decreases from the BAU scenario, 0.726 Mt-C to 0.674 Mt-C. However, the Iwate prefectural government expends $105 million annually, which is 1.5% of the total tax revenue in the year 2003. The carbon-tax refund effectively encourages further reductions in CO₂ emissions. Under the $20/tC carbon tax, proposed by the Ministry of the Environment, the carbon-tax refund leads to a reduction in residential CO₂ emissions from 0.726 Mt-C to 0.712 Mt-C.     

The optimal gas tax for California

This paper calculates the optimal gasoline tax for the state of California. According to our analysis, the optimal gasoline tax in California is $1.37/gal, which is over three times the current California tax when excluding sales taxes. The Pigovian tax is the largest part of this tax, comprising $0.85/gal. Of this, the congestion externality is taxed the most heavily, at $0.27, followed by oil security, accident externalities, local air pollution, and finally global climate change. The other major component, a Ramsey tax, comprises a full $0.52 of this tax, reflecting the efficiency in raising revenues from a tax on gasoline consumption due to the inelastic demand of this consumption good.     

The impacts of carbon tax and complementary policies on Chinese economy

Under the pressure of global warming, it is imperative for Chinese government to impose effective policy instruments to promote domestic energy saving and carbon emissions reduction. As one of the most important incentive-based policy instruments, carbon tax has sparked a lively controversy in China. This paper explores the impact of carbon tax on Chinese economy, as well as the cushion effects of the complementary policies, by constructing a dynamic recursive general equilibrium model. The model can describe the new equilibrium for each sequential independent period (e.g. one year) after carbon tax and the complementary policies are imposed, and thus describe the long-term impacts of the policies. The simulation results show that carbon tax is an effective policy tool because it can reduce carbon emissions with a little negative impact on economic growth; reducing indirect tax in the meantime of imposing carbon tax will help to reduce the negative impact of the tax on production and competitiveness; in addition, giving households subsidy in the meantime will help to stimulate household consumptions. Therefore, complementary policies used together with carbon tax will help to cushion the negative impacts of carbon tax on the economy. The dynamic CGE analysis shows the impact of carbon tax policy on the GDP is relatively small, but the reduction of carbon emission is relatively large.     

The rise and fall of French Ecological Tax Reform: social acceptability versus political feasibility in the energy tax implementation process

The French government has a 10-year history of negotiations with industry, resulting in voluntary agreements on energy consumption. When implemented, these voluntary agreements produced very few results in terms of global reduction of greenhouse emissions (Politiques et Management Public 11(4) (1993) 47), hence the idea of an energy tax became increasingly attractive for many French decision-makers. Ecological/Environmental Tax Reform (ETR) should have been one of the major political decisions and successes of the past leftwing coalition government. Instead it became one of its major failures as the Constitutional Court decided to terminate the energy tax project in December 2000. Through insights gleaned from focus groups and interviews with business-people and decision-makers, an attempt is made to understand the failure of the energy tax project. Firstly, decision-makers lacked crucial information about public and business opinions and secondly, there were conflicts between the relevant administrations. The fuel revolts of 2000 ended any hope of resolving the conflicts and implementing ETR, which was ultimately found unconstitutional. This paper examines the political controversies raised by the ETR project and the reasons for its eventual collapse, in the hope of contributing new understanding to the body of knowledge on the political difficulties of introducing environmental policy instruments.