International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

The Impact of Environmental Tax on Low-Carbon Transition
Meng Liu

This study examines endogenous and directed technical change with environmental tax basing on Aghion and Howitt (1998) growth model. We show that the tax policy with enough tax rate could effectively contribute to low-carbon transition. We also find that: (1) using the tax revenue to subsidy clean technology development could reduce minimum tax rate and correct the distortion of tax revenue to economic. (2) levying tax on “dirty” production mighthold back economic development, increase related household expenditure and often the influence on low-income group is higher than on the high-income family. (3) these negative impacts of environmental tax might be gradually alleviated by long-term tax policy implementation.

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