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Individual Paper: Ecological tax reform

Strengthening labour and taxing the environment as a path to a degrowth society

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Low growth or degrowth scenarios encounter a fundamental problem: unemployment may rise and could become an even bigger problem. The reason is meant to be technological change that reduces the number of jobs - Keynes called it technological unemployment. One possible solution is to reduce working hours. Thereby still existing work could be shared. Another possible solution is a shift of taxes, a so-called ecological tax reform. Nowadays, in Germany more than 60% of all taxes are in respect to labour, while only less than 5% of all taxes are environmental taxes. That means that labour is comparably expensive while environmental goods are comparably cheap. So it can make sense to change the tax system from its labour orientation to an environmental orientation; not only for environmental reasons but also for the preservation of jobs. This ecological tax reform is also defined to be revenue neutral to meet its double dividend: savings of environmental goods and a reduction of unemployment.
New tax burdens for the economy could imply less GDP growth or in more extreme cases no or degrowth. For that reason a real shift of the tax base towards ecological goods could not only be a path to a degrowth economy, but also provide a stable economic framework for this transition.
It has to be asked and analyzed if this expected effect occurs. And even if, what does it mean for an economy that is embedded in international trade and international competition? What does it imply for distributional effects due to high dependence on material goods of low income people? Can this shift even give technological change a direction, since environmental goods are more expensive? Since it should not be expected that all sectors benefit homogeneously, which sectors are going to benefit and which to lose? Should disadvantaged industries are supported? And, finally, does this national reform conflict with emission trading systems as the EU-wide EU ETS?
All these questions are important to be asked and are wished to be discussed in this session. The underlying project is my doctorial thesis at Heidelberg University. This work also simulates and analyzes several tax reform scenarios for the German economy. It means that there can be said much more if wanted. In case, please let me know.


Day: 2018-08-24
Start time: 11:30
Duration: 00:15
Room: ABF (Lilla sallen)
Track: Politics of Degrowth



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