Pollution and reforms of domestic and trade taxes towards uniformity
AuthorMichael, Michael S.
SourceInternational Tax and Public Finance
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This paper builds a small open economy trade model where there is pollution from the production and consumption of goods. In the presence of production and consumption pollution, we examine a piecemeal consumer-price-neutral reform of the tariff and consumption tax and a piecemeal producer-price-neutral reform of the export and production taxes on a specific good. The paper identifies sufficient conditions under which the above tax reforms improve welfare and increase government tax revenues. © 2012 Springer Science+Business Media, LLC.