Implications of ETR in Europe for Household Distribution

Daniel Blobel, Holger Gerdes, Hector Pollitt, Jennifer Barton, Thomas Drosdowski, Christian Lutz, Marc Ingo Wolter and Paul Ekins

in Environmental Tax Reform (ETR)

Published in print April 2011 | ISBN: 9780199584505
Published online May 2011 | e-ISBN: 9780191725012 | DOI:

Series: Creating Sustainable Growth In Europe

Implications of ETR in Europe for Household Distribution

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This chapter looks in depth at the possible implications of ETR for household distribution. It starts with a literature review, which shows that ETR in principle can be regressive, especially when it applies to household energy use, but that there are various ways in which this regressive effect can be mitigated. It then proceeds to analyse, using the E3ME model, the ETR scenarios described in Chapter 9. Because in this case the ETR increases household income, the income for all household groups increases, but in general those for middle quintiles increase by a smaller proportion than for the top and bottom quintiles. A rather different pattern emerges from a distributional analysis of an ETR for German households, when clearly regressive effects are apparent, but these are small, and could therefore largely be removed using revenues from the ETR.

Keywords: energy use; household income; households; regressive effects

Chapter.  20483 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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