Study on economic and environmental impacts of energy taxation, for European Commission, for DG TAXUD
The objective of this project is to update and extend the 1997 impact with the model GEM-E3-Europe and to evaluate the macroeconomic impact of different proposals of energy taxation reform within the EU associated with a recycling of the tax revenues. The GEM-E3 model is really appropriate to evaluate such type of reform which has potentially an impact on the economy, the energy system and the environment of each member state and on the interactions between the member states. As GEM-E3 is a macro-sectoral general equilibrium model, it allows to assess the impact of an energy taxation reform in terms of economic indicators, such as GDP, employment and balance of trade in terms of GDP and their sectoral implications, and in terms of environmental indicators, CO2, SO2, NOx, VOC and PM emissions though it remains at a rather aggregate level. Having a specific model for each of the 14 EU countries (Luxembourg's model is not available) allows to give an indication on the distributive consequences between countries of the tax reform. Since the 1997 study the model has been updated to the base year 1995, this update is briefly described in the annex on GEM-E3. Within this project, the proposals to be evaluated are the following:
- impact of the pending proposal, imposing a minimum tax rate for a wide range of energy products combined with a tax recycling through a decrease of the social security contribution,
- possibility of enhanced cooperation, where only a subset of the Member States takes part in the EU energy tax regime,
- impact of an energy tax, combined with a permit trading system for energy intensive sectors as proposed in the Commission Directive (COM(2001)581).
The precise content of each scenario will be defined in collaboration with the Commission services.
Project Coordinator
Katholieke Universiteit Leuven, Center for Economic Studies (KUL)
Subcontractor
Institute of Communication and Computer Systems (E3MLab/ICCS)
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