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2021 | OriginalPaper | Buchkapitel

# 5. Analysis of Incidence Through E-SAM

verfasst von : Rajat Verma

Erschienen in:

Verlag: Springer Singapore

## Abstract

The question related to the levy of ecotaxes has been examined empirically in this chapter along with the most desired discussion on incidence, i.e. who ultimately pays the tax? The progressivity of the ecotaxes has been examined using the framework of E-SAM on five rural and four urban household categories which have been classified based on their occupational structure. This analysis is attempted to address research gaps in the literature which pointed out that the studies did not examine the effect of such a tax by incorporating all the three environmental components. A price vector model has been used to model the incidence of ecotax on households. Here ecotaxes have been modelled on the value of outputs of the five most polluting sectors in India; thermal (NHY-Non-Hydro), fertilisers (FER), iron and steel and non-ferrous basic metals (MET), paper and paper products (PAP) and textile and leather (TEX). Such an ecotax could be categorised under output tax. An important outcome of this exercise was that the ecotaxes were found to be overall progressive in both rural and urban household classes for both 5 and 10% tax rates. However, in the case of rural household categories, the tax was found to be mildly regressive for the household class of Rural Agricultural Self-Employed (RASE). Revenue generated from this levy could be utilised for making the tax progressive, and it was found that to make this tax progressive for the household class RASE, it is necessary to transfer revenue in the range of meagre 2–10% of the total revenue that has been generated from the levy of this tax.

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Fußnoten
1
Please refer to Sect. 3.​2.​1 Chap. 3 of the volume where the definition of tax base for ecotaxes has been provided in detail.

2
The case of Environmental Fiscal Reforms (EFR) which has been deliberated upon in the Sect. 2.​1 of Chap. 2.

3
This issue will be undertaken in the Chap. 6 and this was also touched upon in the Sect. 2.​1 while discussing the concept of Environmental Tax Reform (ETR).

4
Revenue neutrality implies that the net revenue generated from ecotaxes should be zero. This is possible if the revenue that is collected is used for reducing tax rates of other distortionary taxes.

5
Clarity on this aspect will be ascertained after chapter six has been read along with chapter five.

6
Details on the method of computation of the polluting tax bases can be found in Sect. 4.​6 of Chap. 4.

7
This section and parts of Sect. 5.4 draw from the author’s co-authored work published previously as—Verma, R., & Pal, B. D. (2018). Incidence of Environmental Taxes in India: Environmentally Extended Social Accounting Matrix-Based Analysis in India. In K. Mukhopadhyay (ed.), Applications of Input–Output Framework. Singapore: Springer Nature. Also accessible at: https://​link.​springer.​com/​chapter/​10.​1007/​978-981-13-1507-7_​10.

8
One of our earlier studies (Verma & Pal, 5.2018) has also used this approach.

9
This section only gives the results from the E-SAM model, the explanations for these results have been provided in Sect. 5.5.

10
The results do not change even if the incidence is examined by organising households as per their total expenditure and therefore these graphs have not been presented in the text.

11
\begin{aligned} {\text{Per Capita Tax Burden}} & = \frac{{{\text{Initial Expenditure}}\,.\,{\text{Tax Burden - Initial Expenditure}}}}{{{\text{Population}}}} \\ & = \frac{{\text{Initial Expenditure }}}{{{\text{Population}}}}\left( {{\text{Tax Burden}} - 1} \right) \\ \end{aligned}

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