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Project title

Green VAT Reform

Primary Funding Agency

Environmental Protection Agency

Co-Funding Organisation(s)

n/a

Lead Organisation

Economic & Social Research Institute (ESRI)

Lead Applicant

Anne Nolan

Project Abstract

This project will combine micro econometric modelling and applied macro economic modelling to investigate the possibility and impacts of introducing green VAT rates in Ireland. In this project we will estimate carbon footprints per monetary unit of consumption for households for different commodities. These estimates will be made on the basis of the input-output analysis of the project concerning consumption-based emissions (see Topic 5.1 above). These estimates will be linked to household expenditure data and we will analyse the distribution of carbon footprints among Irish households, highlighting hot spots of carbon-intensive consumption. Secondly, we will employ a demand system to model households' consumption behaviour. Once the parameters from the model are estimated, changes in consumption and tax incidence can be analysed. This allows us to estimate the distributional and environmental effects of changes in households' consumption patterns due to different VAT reforms accommodating for environmental damages. In addition, we explore the distributional and environmental effects of several revenue recycling mechanisms. Finally, we will use the VAT estimates and household consumption shifts to implement the Green VAT in the ESRIs climate economy model (I3E). This can give insights into the overall macroeconomic impacts of the policy, e.g GDP, sectoral-outputs, employment etc.

Grant Approved

n/a

Research Hub

Sustainability

Research Theme

Socio-Economic Considerations

Start Date

01/07/2021

Initial Projected Completion Date

30/06/2022