Análisis de los resultados

In this section estimates are made of the distributional incidence of a carbon/energy tax along the lines proposed by the European Commission, based on the assumption that the quantity of energy purchased by househoids wouid be unaffected by the imposition of the new tax. The estimates, which relate to a tax imposed at the full level of $10 per barrel of oil, are based on the consumer spending data for seven EC member states described in the previous section, and the ad vaiorem equivalent carbon/energy tax rates calculated on the basis of energy prices and carbon/energy content for each fuei, as set out in the Annex to this chapter.

The estimates reflect two strong assumptions;

First, the estimates of the amount of tax that wouid be paid by individual households are based on the existing pattern of househoid energy consumption in volume terms. This assumption is unlikely to be strictly accurate; amongst other things it violates the "adding up" requirement for household budget balance. It is also, of course, inconsistent with the aim of introducing a carbon tax which is to reduce the use of carbon-based energy. However, price elasticities of energy demand may be quite low and, in assessing the distributional effects of energy taxation, the assumption of no behavioural response may give a reasonable indication of the distributional of tax payments across income groups. Later in this section the sensitivity of distributional incidence estimates to the inclusion or omission of behavioural responses is evaluated, using data for the UK and a behavioural model of household spending; it is found that, in the case of the carbon tax, making an aiiowance for behavioural responses does not make a substantial difference to the overail distributional impact of the tax, in terms of additional tax payments, despite the fact that price elasticities differ considerably between income groups.

Secondly, the estimates assume that the taxes would be fully passed on to consumers in the prices of energy products. This is, of course, a strong assumption. Although introduction of carbon tax in the Community alone might have oniy a smail impact on giobal energy demand, co-ordinated introduction of a carbon tax in ali major countries couid have a significant impact on the demand for energy, and hence on the price of energy. In these circumstances, part of the burden of a carbon tax would be borne by the owners of energy resources, and an analysis which assumes that all of the tax is passed on to consumers would then tend to overstate the impact on household incomes in consuming countries.

Non-behavioural estimates made on the above basis are summarised in Tables 1 and 2 and Figure 3 for the seven EC member states. These show the distributionai incidence of househoid payments of the EC carbon/energy tax on househoid direct energy purchases, based on 1985 patterns of income and expenditure. Tables 3 and 4 show separately the carbon tax burden on purchases of domestic energy and motor fuel respectively. A number of results may be highlighted:

• On average across the seven member states, carbon/energy tax payments by the average household would amount to some ECU 120 per annum in 1985 prices, equivalent to about 0.85 per cent of average household expenditures.

6. Distributional aspects of carbon/energy taxes

• There would be a considerable range In average tax burdens, reflecting differences in the level of energy consumption at different income levels, and in the carbon/energy content of that consumption. The former explanation mainly accounts for the contrast between the UK and Ireland on one hand, where the carbon tax burden per household would exceed ECU 160 annually (some 1.2 per cent of household total expenditure), and Spain on the other, where the annual carbon tax burden would be little more than ECU 50 (some 0.5 per cent of spending). The latter explanation accounts for the low tax burden in France, of ECU 106 per household per annum, equivalent to about 0.7 per cent of total spending.

• The variation in the overall tax burden arises principally because of variation in the carbon tax burden on domestic energy, where the amounts of tax are both larger and more variable across countries than the carbon tax burden on motor fuels. Except in the case of the Netherlands and Germany, the percentage burden of carbon tax payments on motor fuels lies in a very narrow band of 0.21 - 0.25 per cent of spending.

• In all countries, the carbon tax burden on domestic energy for the bottom quartile group is higher than the average for all households, and also higher than the figure for the top quartile. Carbon tax payments on domestic energy would thus be regressive in all seven member states.

• In all the member states the carbon tax burden on motor fuel of the bottom quartile group lies below the average for all households, reflecting be low-average fuel spending (and presumably also lower-than-average rates of vehicle ownership). Across the remainder of the income distribution the carbon tax burden on motor fuels Is broadly a constant proportion of total household spending.

• The overall distributional incidence of the carbon tax, shown in Figure 3, reflects the combined distributional effects of the tax on domestic energy and motor fuels. Where domestic energy use is relatively low, and motor fuel consumption relatively high, the regressivity arising from the taxation of domestic energy is counteracted by progressivity from the taxation of motor fuels (at least, as far as the relative position of the bottom quartile is concerned). In Spain and Italy the overall effect is broadly distributionally neutral, and In Germany, France and the Netherlands only mildly regressive. Only in the UK and Ireland of the countries shown does the overall effect of the carbon tax on direct household purchases of energy seem likely to be significantly regressive. In the UK the ratio of the percentage burden of the carbon tax on the bottom quartile to the burden on the average household would be 1.8 and In Ireland the same ratio would be 1.6.

6. Distributional aspects of carbon/energy taxes

Table 1

Carbon tax payments per household, by decile and quartile groups of gross household income.

1985, ECU per annum

Decile groups Quartile groups

All house­ holds Poorest 10% Second 10% Third 10% Poorest 25% Second quartile Third quartile Richest 25% Germany 145.85 62.13 83.71 99.69 77.42 123.75 165.08 217.52 Spain 52.15 19.01 30.71 32.68 25.88 42.73 57.60 83.00 France 106.00 59.58 65.90 76.00 64.26 90.80 115.12 154.14 Ireland 168.59 83.46 94.88 123.53 112.69 159.67 179.58 221.90 Italy 107.57 29.07 43.06 60.89 39.87 79.46 115.37 194.90 NL 126.21 78.55 88.00 97.04 85.96 107.96 132.75 177.76 UK 160.96 94.13 115.44 128.06 107.60 145.11 173.31 219.01 Table 2

Carbon tax payments as a percentage of household total expenditures, by decile and quartile groups of gross household income.

Percentages of total househoid spending

Decile groups Quartile groups

All house­ Poorest Second Third 10% Poorest Second Third Richest

holds 10% 10% 25% quartile quartile 25%

Germany 0.86 1.06 1.01 0.96 1.01 0.94 0.87 0.77 Spain 0.46 0.47 0.51 0.46 0.49 0.48 0.47 0.45 France 0.66 0.85 0.78 0.73 0.79 0.70 0.66 0.61 Ireland 1.17 1.76 1.93 2.00 1.80 1.42 1.13 0.91 Italy 0.78 0.81 0.76 0.81 0.78 0.81 0.79 0.77 NL 0.83 1.01 0.98 0.89 0.99 0.85 0.83 0.75 UK 1.19 2.58 2.03 1.74 2.10 1.45 1.16 0.92 152

6. Distributional aspects of carbon/energy taxes

Figure 3

Carbon tax payments as a percentage of household total expenditures, by quartile groups of gross househoid income.

2.2 O) C y

I

I

ê

Average equivalent total household expenditure of quartile EC average = 100

These estimates of the distributional incidence of the EC carbon/energy tax may be compared with estimates of the distributional incidence of a carbon tax in the United States, made by Poterba (1991) using a similar methodology. Poterba’s estimates (reproduced in Table 5), show the distributional effects of a carbon tax of $100 per ton of carbon in 1990 price terms, using data from the 1985-6 Consumer Expenditure Survey. The equivalent carbon tax in the US in 1991 price terms (ie inflated by the US consumer price index) would be some 4 per cent higher (le some $104 per tonne of carbon), some 18 per cent higher than the EC proposal of $10 per barrel, equivalent to some $88 per tonne.