TITLE:
Austria’s Path to a Climate-Friendly Society and Economy—Contributions of an Environmental Tax Reform
AUTHORS:
Sebastian Goers, Friedrich Schneider
KEYWORDS:
Environmental Tax Reform, Revenue Recycling, Climate-Friendly Investment, Equity, Macroeconomic Simulation
JOURNAL NAME:
Modern Economy,
Vol.10 No.5,
May
16,
2019
ABSTRACT: In the present study,
we explore an environmental tax reform for Austria as an instrument to achieve
the main objectives of the current Austrian Climate and Energy Strategy #mission2030. Our concept aims at a dual
objective of reducing CO2-eq emissions, while simultaneously further
triggering innovation processes of the Austrian industry, resulting in a
transfer of benefits to society. The focused measures at the national level to
achieve climate protection comprise an increase of the mineral oil tax and the
introduction of CO2-eq taxation for non-EU-ETS sectors. These taxes
create revenues which are recycled through 1) reductions of non-wage labor
costs for companies, 2) compensation transfers for private households of low-
and middle-income groups, 3) investment in research and innovation for industry
and 4) investments in key technologies to advance #mission2030, such as alternative propulsion systems (electric, H2),
and the use of biomethane for space heating and thermal renovation. Results of
simulations for the period 2020 to 2025 via a macro-sectoral model display the
potential for multiple dividends if the revenues are reused this way.
Furthermore, besides offering significant reductions of CO2e
emissions, the proposed reform triggers positive impacts on GDP, employment,
and private consumption, thereby ensuring social compatibility.