Sustaining revenues from an environmental fiscal reform Sample Clauses

Sustaining revenues from an environmental fiscal reform. A common question when considering an EFR is how long the revenues from higher taxes on environmentally harmful products and activities can be sustained. In general, the answer depends on the starting level of the tax, potential tax rate increases, which emissions, activities and tax payers are covered, and the responsiveness of the tax payers (Xxxxxx, Xxxxx and Austin, 2015[58]). If tax payers respond strongly to a narrowly defined environmental tax, e.g., on the use of single-use plastic bags, than revenues can decline fast. However, if the base of tax is broad (e.g., carbon emissions from energy use) and the price elasticities of demand are low, revenues can be sustained over decades. An ex-post evaluation of Germany’s ecological tax reform