Author:

Keywords:

Environmental taxation, sustainability transitions, Instrument choice, Environmental tax reform, greening of a tax system, Chinese climate policy

Abstract:

This PhD study makes an in-depth analysis of the use of environmental taxation as a regulatory policy instrument. It is based on insights from both social and political science and economics. The central research question is “How can the use of ET as a regulatory policy instrument be explained, measured and optimized?” This question harbours several underlying research questions, which are elaborated in an introductory chapter, four academic publications, and a concluding chapter. In the Introduction, an analysis is carried out of the most important policy-making models, which explain how policy decisions come about. The instrument of environmental taxation is fit into these models. Subsequently, a taxonomy of policy instruments is developed, based on different criteria such as the control model. Finally, instrument choice by policy makers is explained, both in theory and in practice. In Paper 1, the taxation instrument is compared with emissions trading in the context of climate policy, both in theory and in a case study on China. Although the theoretical potential of both instruments is similar, carbon taxation appears to be the better option for the case of China, taking into account design complexity and the limited institutional capacity and experience. In Paper 2, the existing indicators for measuring the greening of a tax system are evaluated and a new type of aggregated indicator is developed, based on index theory. Although the validity of the new aggregate indicator is higher than the dominantly used revenue-based indicators, a number of validity issues remain, and complexity can be a burden for its use by government agencies. Ideally, the greening of a tax system will be evaluated by using a set of indicators, including the revenue-based indicators, single tax rates, the new aggregate tax rate-based indicator, and the implicit tax rate on energy. In Paper 3, the theory of environmental taxation is confronted with the theory of sustainable transitions thinking. Environmental taxation was found to have the highest potential for realizing long-term changes in technological development and social practices. Furthermore, the optimal impact is expected to occur when environmental taxation is used in a policy mix, along with other policy instruments, policy strategies and policy processes. In Paper 4, public support for environmental taxation is studied, both in theory and empirically, based on a survey in Flanders. Support is lower for taxes that are specified in detail. Education, income and environmental concern were found to be determinants of higher support. Revenue-recycling options can be ranked in the ‘Ladder of Acceptability of Revenue Recycling Options’ (LARRO), with environmental expenditures receiving the highest support. In the concluding chapter, transversal conclusions for the use of environmental taxation as a regulatory instrument are presented. Trade-offs were found between efficiency on the one hand, and acceptability, equity, competitiveness, and long-term robustness on the other hand. The use of policy mixes and accurate policy design are crucial success factors for environmental taxation. A future research agenda could be constituted through a comprehensive and integrated research programme, in which all trade-offs are analysed and empirical evidence is gathered for improved knowledge regarding the use of environmental taxation as a regulatory policy instrument.