Environmental Taxation in China and Asia-Pacific
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Environmental Taxation in China and Asia-Pacific

Achieving Environmental Sustainability through Fiscal Policy

Edited by Larry Kreiser, Julsuchada Sirisom, Hope Ashiabor and Janet E. Milne

Environmental Taxation in China and Asia-Pacific contains an integrated set of detailed chapters providing insights and analysis on how fiscal policy can be used to achieve environmental sustainability. Highly topical chapters include energy tax policy in China, environmental fiscal reform, carbon tax policy in northeast Asia and environmental taxation strategies in China, Asia and Australia, as well as many other relevant topics.
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Chapter 7: Carbon Tax Policy Progress in North-east Asia

Xianbing Liu, Kazunori Ogisu, Sunhee Suk and Tomohiro Shishime


Xianbing Liu, Kazunori Ogisu, Sunhee Suk and Tomohiro Shishime 1. INTRODUCTION Both carbon tax policy and cap and trade schemes aim to discourage the use of fossil fuels by making carbon emissions more costly. Many economists support a carbon tax due to its advantages over an emissions trading scheme (ETS). Carbon tax can be levied upon carbon emissions from all sectors while an ETS requires accurate monitoring of emissions, and thus is only applicable to large emitters. Fair allocation of carbon credits is almost impossible in an ETS. Uncertain carbon prices in an ETS cause companies to become myopic and thereby discourage their reduction efforts. Conversely, a fixed carbon tax rate is more straightforward for companies and allows them to make decisions for the medium and long term. Additionally, it is easier to minimize the number of losers by using carbon tax revenues, either to reduce other taxes or to lower the burden on energy-intensive sectors. Recently, several famous economists have even argued that an international carbon tax is systematically better and could be agreed upon more easily as a post-Kyoto scheme than a global cap and trade scheme (e.g. Mankiw, 2007). Carbon tax was first introduced in Finland in 1990 and then levied in some other European countries, such as Sweden, Norway, the Netherlands and Denmark. Although obvious differences were found between the carbon tax policies implemented in Europe (Cansier and Krumm, 1997), they have shown broadly positive effects in reducing the use of fossil fuels and CO2 emissions...

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