Fossil fuel carbon taxation policy effect on thai household expenditure using input–output price structural path model

Taxation levying promotes and enhances the management of greenhouse gas emissions; however, its effect on product price increases for households requires clarification. The impact of a fossil fuel taxation policy on Thai household expenditure was investigated. Carbon taxation rate was based on abatement cost. An input–output price model was applied to establish economical price structures and price changes as a carbon result of implementing a carbon taxation policy. A national consumer expenditure survey and price changes were used to evaluate the carbon tax burden distribution on each households, which have different expenditure. By using marginal abatement cost curve, reduction target is 175 MtCO 2 e by 2030. Results indicated that achieving the reduction target by that time is possible, although welfare losses in households were inevitable. Price increases resulting from implementing carbon taxation in each product sector ranged from 0.8 to 19.6%. Commodity price changes were largest for high carbon‐intensive sectors including Public utilities (19.6%), Nonmetallic products (15.7%), and Transport & Communication (8.5%). Welfare losses per household from taxation were around 3–4% for each group, resulting from both price changes and expenditure patterns. Highest tax burden fell on the economically inactive group that spent a larger share of their income on basic survival essentials which were heavily impacted by increased prices. © 2019 American Institute of Chemical Engineers Environ Prog, 38:e13146, 2019