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On the Emissions-Inequality Trade-off in Energy Taxation: Evidence on the German Car Fuel Tax

Diskussionspapiere extern

Dragana Nikodinoska, Carsten Schröder

Berlin: Freie Univ. Berlin, FB Wirtschaftswiss., 2015, 40 S.
(Discussion Paper / School of Business & Economics ; 2015,06)


By using estimates from an Almost Ideal Demand System (AIDS), we investigate how the German energy tax on car fuels changes the private households’ CO2 emissions, living standards, and post-tax income distribution. Our results show that the tax implies a trade-off between the aim to reduce emissions and vertical equity, which refers to the idea that people with a greater ability to pay taxes should pay more.

Carsten Schröder

Board of Directors SOEP and Division Head Applied Panel Analysis in the German Socio-Economic Panel study Department

JEL-Classification: C31;D12;D63;H22;H23;I3;K32;Q21
Keywords: energy taxes, environmental taxes, energy demand, emissions, tax incidence, redistribution, inequality
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