Achieving the triple dividend in Portugal: a dynamic general-equilibrium evaluation of a carbon tax indexed to emissions trading. Issue 2 (3rd April 2019)

• Record Type: Journal Article
• Authors: Pereira, Alfredo Marvao; Pereira, Rui Marvao
• Is Part Of: Journal of economic policy reform. Volume 22:Issue 2(2019)
• Page Start: 148
• Page End: 163
• Publication Date: 2019-04-03
• Subjects: carbon taxation -- economic and budgetary effects -- dynamic general equilibrium -- endogenous growth -- Portugal; D58 -- H63 -- O44; Economic policy -- Periodicals; Commercial policy -- Periodicals; Monetary policy -- Periodicals; International trade -- Periodicals; Developing countries -- Economic policy -- Periodicals; Former Soviet republics -- Economic policy -- Periodicals; Post-communism -- Periodicals; Policy sciences -- Periodicals; 338.9
• DOI: 10.1080/17487870.2017.1348298
• Languages: English
• ISSNs: 1748-7870

Abstract

Abstract : Using a dynamic general equilibrium model, we simulate the environmental, economic, and budgetary effects in Portugal of a new carbon tax indexed to the carbon price in the European Union's Emissions Trading System market. Through careful recycling of the carbon tax revenues to finance lower personal income taxes, lower Social Security contributions, and higher investment tax credits – in particular when changes are directed at promoting energy efficiency – we show that it is possible to design a carbon tax reform that boosts economic growth and strengthens fiscal consolidation. These results served as the basis for a new carbon tax eventually approved by the Portuguese Parliament.