Assessing the Distributional Impacts of Carbon Tax among Households across Different Income Groups: The Case of China. Issue 7 (December 2013)

• Record Type: Journal Article
• Authors: Liang, Qiao-Mei; Wang, Qian; Wei, Yi-Ming
• Is Part Of: Energy & environment. Volume 24:Issue 7/8(2013)
• Page Start: 1323
• Page End: 1346
• Publication Date: 2013-12
• Subjects: Carbon tax -- Income groups -- Distributional impacts -- Complementary measures; Power resources -- Environmental aspects -- Periodicals; Power resources -- Periodicals; Renewable energy sources -- Periodicals; Energy policy -- Environmental aspects -- Periodicals; Ressources énergétiques; Politique énergétique; Energy policy -- Environmental aspects; Power resources; Power resources -- Environmental aspects; Renewable energy sources; Periodicals; 333.7
• DOI: 10.1260/0958-305X.24.7-8.1323
• Languages: English
• ISSNs: 0958-305X

Abstract

Employing the improved China Energy and Environmental Policy Analysis (CEEPA) model, a recursive dynamic computable general equilibrium model, this study aims to examine the distributional impacts of a carbon tax in China on households over different income groups. The effects of different complementary measures were also analysed. The results indicate that without any protections for households, a carbon tax will widen the income and welfare gap not only between urban and rural but also within urban groups, though it could have a weakly progressive effect within the rural. If the carbon tax revenue is used to reduce indirect tax whilst appropriately increasing government transfers to rural households and vulnerable urban groups in proportion to population, the distributional deterioration caused by the carbon tax could be effectively mitigated, and the negative impact on the living standards of households over all income groups could be alleviated while maintaining emission reductions and minimising the overall socio-economic impacts.