Efficiency and equity aspects of energy taxation

Publication type

EUROMOD Working Paper Series

Series Number

EM12/13

Series

EUROMOD Working Paper Series

Author

Publication date

July 30, 2013

Abstract:

We analyse the distributional effects of increased oil excises in Belgium by combining a
Computable General Equilibrium (CGE) model with the EUROMOD microsimulation framework
that exploits the rich detail of household-level data. The link between the CGE model and the
micro level is top-down, feeding changes in commodity prices, factor returns and employment by
sector into a non-behavioural microsimulation. The results suggest that policymakers face an
equity-efficiency trade-off driven by the choice of revenue recycling options. Distributional effects
of the environmental tax reform appear to depend strongly on changes in factor prices and welfare
payments.

Subjects

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