Distributional Effects of Carbon Tax on Vietnamese Households: An Integrated Approach
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This paper combined Input-Output analysis, a Computable General Equilibrium (CGE) model, and a Quadratic Almost Ideal Demand System (QUAIDS) to examine the effects of carbon tax scenarios on the consumption patterns and welfare of households of different income levels and to determine how the change in consumption affects emissions in Vietnam. We implemented four scenarios: an economywide carbon tax of $10, $20, and $30 per CO2 ton emitted, and a fourth scenario involving offsetting the carbon bill of emissions embedded in household consumption by increasing the ad valorem tax for commodities purchased by private households. The results indicate that changes in the consumption of poor households are responsible for larger changes in emissions compared to those of rich households due to their larger increase in spending on carbon-intensive commodities. Consumption change of rich households can help reduce emissions due to their lower expenditure on electricity when carbon taxation is in place. In addition, setting a very high carbon tax rate or directly transferring the carbon tax burden to households via the sales tax might increase aggregate emissions. The carbon tax is found to be slightly progressive towards rich households in all tax scenarios. We recommend alleviating the expenditure burden on electricity for poor and rural households as a key measure for achieving the goal of a carbon tax. It is also important to stabilize food prices to ensure adequate food consumption for middle- and lowincome households.
Abstract
This paper combined Input-Output analysis, a Computable General Equilibrium (CGE) model, and a Quadratic Almost Ideal Demand System (QUAIDS) to examine the effects of carbon tax scenarios on the consumption patterns and welfare of households of different income levels and to determine how the change in consumption affects emissions in Vietnam. We implemented four scenarios: an economywide carbon tax of $10, $20, and $30 per CO2 ton emitted, and a fourth scenario involving offsetting the carbon bill of emissions embedded in household consumption by increasing the ad valorem tax for commodities purchased by private households. The results indicate that changes in the consumption of poor households are responsible for larger changes in emissions compared to those of rich households due to their larger increase in spending on carbon-intensive commodities. Consumption change of rich households can help reduce emissions due to their lower expenditure on electricity when carbon taxation is in place. In addition, setting a very high carbon tax rate or directly transferring the carbon tax burden to households via the sales tax might increase aggregate emissions. The carbon tax is found to be slightly progressive towards rich households in all tax scenarios. We recommend alleviating the expenditure burden on electricity for poor and rural households as a key measure for achieving the goal of a carbon tax. It is also important to stabilize food prices to ensure adequate food consumption for middle- and lowincome households.
참고문헌 (53)
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