The German ETR
The German government had two objectives when it introduced the ETR in 1999 improved environmental protection and in particular reduced greenhouse gas emissions as a means to address climate change reduced employers' and employees' statutory pension contributions in order to reduce labour costs and to increase employment. The ETR was implemented in two phases. The first phase covers the period between 1999 and 2003 and the main policies were an increase in existing energy taxes and introduction...
References
Agenor, P. R. 1997. 'Competitiveness and external trade performance of the French manufacturing industry'. Weltwirtschaftliches Archiv, 133 1 103-33. Amendola, G., Dosi, G., and Papagni, E. 1993. 'The dynamics of international competitiveness'. Weltwirtschaftliches Archiv, 129 3 451-71. Andersen, M. S. 1999. 'Governance by green taxes implementing clean water policies in Europe'. Environmental Economics and Policy Studies, 2 1 39-63. -Lerche, D. B., Kristensen, P., and Smith, C. 2005....
Denmark
Denmark was one of the first countries in Europe to introduce a CO2 tax. The CO2 tax represented an addition to the energy taxes already in place on oil products, coal, and electricity consumption. The CO2 tax was introduced in two phases in May 1992 it was applied to energy products consumed by households and in January 1993 it was extended to businesses.3 It was moreover accompanied by a reduction in the rates of existing energy taxes. Introduction of the CO2 tax represented a turning point...
Nonprice competitiveness in EME
7.2.3.1 THE ROLE OF R amp D EXPENDITURE AND INVESTMENT The technical progress indicators are used as a measure of innovation and product quality and estimate the non-price competitiveness of an industry. Ideally, E3ME could incorporate measures of innovatory activity in each EU member state, relative to the same activity in its main competitors, at a detailed industrially disaggregated level on an annual basis, covering the period 1970-2002, but limited data restrict the choice of inputs. The...
Introduction Kwn
The objective of the research discussed in this chapter is to evaluate the short-term and long-term economic effects of carbon-energy taxes introduced under environmental tax reforms ETRs in the macroeco-nomic framework provided by Cambridge Econometrics' CE Energy-Environment-Economy model for Europe, E3ME. The analysis undertaken in this chapter focuses upon the competitiveness effects in the energy-intensive COMETR sectors5 for the six countries that undertook environmental tax reform in the...
Slovenia 1
The Slovenian CO2 tax, which was introduced in 1997, supplemented the former ad valorem energy taxation of liquid fuels. It was extended in 1999 and 2000 also to include excise duties for transport fuels and natural gas. More than 50 per cent of Slovenia's electricity is produced by hydropower or nuclear units, however, and electricity has not been subject to CO2 taxation per se. However, from 1992-9, electricity was subject to a 5 per cent non-deductible sales tax that also applied to industry...
Profitability as a percentage of sales
The overall profitability of country j e J is equal to the weighted average of its operating profitability in each market, less aggregate fixed costs divided by its total revenue where the weights are equal to the markets' respective shares of total country revenue. Consequently, the change in overall profitability can be decomposed into three parts, due respectively to the change in the country's profitability in each of the individual markets the change in the mix of the country's revenues...
The Porter hypothesis on the relationship between environmental regulation and
Harvard economist Michael Porter argued in The Competitive Advantage of Nations 1990 that contrary to conventional wisdom, environmental standard-setting may actually be able to encourage innovation and hence improve competitiveness, in particular when regulatory standards anticipate requirements that will spread internationally Ashford et al., 1985 Porter, 1998 187 . This 'Porter hypothesis', reflecting and extending a broader literature on regulation and innovation, was proposed within a...
ETR in Sweden
Sweden has embarked on two major fiscal reform processes since the beginning of the 1990s, both involving ETR. The fiscal reform process in 1991 was the first major ETR in Europe. The overall objective of the 1991 fiscal reform process was the reduction of personal income taxation by approximately 71 billion SEK 9.5 billion EUR approx. 4.6 per cent of GDP in 1991 . Income tax rates were cut to around 30 per cent average rate and for high-income earners to around 50 per cent. The loss in revenue...
Winners and losers in ETR
In the following, we explore the premises of the exemptions and special arrangements from a sector perspective what are the actual mitigated costs of ETR to industries and to what extent have these costs been compensated for by revenue recycling through lowering employers' social security contributions SSC From a company perspective, the increased level of carbon-energy taxation will be offset by two factors 1 revenue recycling by reducing SSC, and 2 improved energy efficiency, which leads to...
Introduction Kct
The original Porter hypothesis states that high national environmental standards will encourage domestic industries to innovate and hence improve competitiveness, in particular when the regulatory standards anticipate requirements that will spread internationally Porter, 1990, 1998 . The main reason, according to Porter and van der Linde 1995 , is that environmental regulation puts pressure on industry to innovate new and greener products that, in turn, create better demand conditions for the...
Special tax provisions for industry Xxd
Some form of special tax treatment is part of the Climate Change Levy CCL . Energy-intensive companies are eligible for an 80 per cent tax discount when agreeing to energy efficiency improvement targets. These regulations have been introduced because of concerns that energy-intensive industry in the UK would lose international competitiveness as a consequence of the introduction of the CCL. The approach chosen by the UK government was to give conditional tax exemptions to energy-intensive...
The double dividend debate
David Pearce 1991 directed attention to possible double dividend features of pollution taxes in the debate on policies and measures that followed the first report from the International Panel on Climate Change. Since pollution taxes serve to correct market failures, by definition they do not share the distorting properties of many other taxes. A fiscally neutral package can be adopted by replacing distorting income taxes or corporate taxes by carbon taxes by means of revenue recycling. The...
Import intensity of home market
A necessary and sufficient condition for import penetration of the home market jj for country j e J to decrease increase is that dcj - dc lt gt - dal- de C3 The right-hand side of condition C3 is only equal to zero if the home market share of the country's producers 1 j is equal to the country's share of the total number of firms, or if the change in the choke price in the home market is equal to the average change in the unit costs of all firms. Unlike the previous indicator, one might expect...
Model definition
The model used to assess the validity of the potential indicators is a generalization of the 'reciprocal dumping' model used in international trade analysis see Brander, 1981 Brander and Krugman, 1983 . A homogeneous product is produced by individual firms i e I, located in countries j e J with the subset of firms located in a particular country being denoted by I and the number being denoted by the parameter Nj. The product is purchased by consumers located in distinct markets k e K where the...