The Misinterpretation of Pigouvian Taxes

Annegrete Bruvoll

Research Department, Statistics Norway, Oslo, Norway..

DOI: 10.4236/jep.2013.48A1017                

Abstract

The tax revenues from Pigouvian taxes are difficult to calculate. The optimal pollution taxes are weighted averages of Ramsey taxes and Pigouvian taxes, and the entanglement of environmental, fiscal and other taxes complicate the measurements. The present international environmental tax statistics do not rely on a theoretical basis, and include several fiscal and resource taxes. Starting with the additivity theorem by Sandmo [1], we propose theoretically consistent guidelines for environmental tax statistics. Calculations based on this framework prove that the present international official statistics (Eurostat, IEA, OECD) severely overestimate environmental taxes. The lack of theoretical consistency forms arbitrary results and the statistics used as measures of environmental taxes may cause major flaws in research and policy-making based on such statistics.

Keywords

Environmental Taxes; Fiscal Taxes; Pigouvian Taxes; Ramsey Taxes

Conflicts of Interest

The authors declare no conflicts of interest.

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