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Environmental fiscal reform would improve the environment and reduce the informal economy
Date:12/26/2013

This news release is available in Spanish.

The effect that the introduction of environmental fiscal reform would have on an economic system has been the focus of study since the 1990s. However, studies of this type have until now failed to take the informal economy into consideration; this is an activity which in the case of Spain, for example, could account for as much as 20-25% of GDP. The group of researchers of the UPV/EHU and the BC3 have addressed this subject and have concluded that environmental fiscal reform could help to cut the damage caused by the informal economy on the public system apart from the environmental benefit it would bring in its wake. The journal Energy Economics has published the online version of the work and will shortly be issuing a print version.

As different environmental problems have been emerging, many pieces of academic work have been produced to study the possibility of incorporating environmental fiscal reform and the effect this would have on the economy. Environmental fiscal reform is one of the possible channels for addressing environmental problems and basically consists of levying taxes on the activities associated with environmental problems, like CO2 emissions, and cutting other kinds of taxes. "Environmental taxes manage to get consumers and companies to pay for the damage sustained by society as a result of pollution. What is more, they can be very effective in some cases because they can succeed in bringing about changes in our habits or behaviour and thus lower pollution," explained Mikel Gonzalez-Eguino, one of the researchers responsible for this study.

The raising of taxes by public bodies through the tax system usually finds itself undermined by the so-called informal economy, in other words, the economi
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Contact: Aitziber Lasa
a.lasa@elhuyar.com
34-943-363-040
Elhuyar Fundazioa
Source:Eurekalert  

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