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Is a Uniform Carbon Tax a Good Idea? The Case of Switzerland

Type of publication Not peer-reviewed
Publikationsform Other publication (non peer-review)
Publication date 2016
Author Landis Florian, Rausch Sebastian, Kosch Mirjam,
Project ProSTEP - Promotion or Steering-based Energy Policy: Assessing Efficiency and Distributional Impacts
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Other publication (non peer-review)

Book Is a Uniform Carbon Tax a Good Idea? The Case of Switzerland
Publisher SCCER CREST Working Paper, U Basel

Open Access


This paper analyzes the implications of differentiated carbon taxes for the economic costs of decarbonization, using Swiss climate policy as an example. Employing a numerical general equilibrium model with multiple fuels, end-use sectors, and heterogeneous households, we assess the empirical relevance of three motives for carbon price di erentiation: fiscal interactions with the existing tax code, transportation externalities, and concerns about distributional equity. We find that cost-effective climate policy entails substantially lower taxes on motor than on thermal fuels (by a factor of 0.1{0.6) and that uniform carbon pricing forgoes sizeable efficiency gains (between 5{41 percent). The case for carbon tax differentiation is robust but somewhat weakened if emissions reduction targets are ambitious or if non-climate transportation externalities are taken into account.