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Environmental Impacts of Tariff and Tax Reforms Under Origin and Destination Principles
Author(s) -
Chao ChiChur,
Yu Eden S. H.
Publication year - 2015
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.12108
Subject(s) - tariff , economics , consumption (sociology) , tax reform , consumption tax , point (geometry) , environmental tax , international economics , pollution , public economics , natural resource economics , optimal tax , ad valorem tax , microeconomics , ecology , social science , geometry , mathematics , sociology , biology
Abstract The impacts of a point‐by‐point tariff/tax reform on the environment under the origin‐based or destination‐based tax principle are examined. The policy reform under the origin‐based principle can raise the optimal pollution tax and, hence, improve the environment when the consumption demand and pollution are strongly substitutable, whereas the reform under the destination‐based principle lowers the optimal pollution tax and, hence, worsens the environment. Nonetheless, when the consumption demand and pollution exhibit weak substitutes or even complements, the tariff/tax reform results in less environmental deterioration under the destination‐based principle.