Energy tax policy and household welfare: A partial equilibrium analysis for Vietnam
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PhD Seminar (Econ)
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Mitigating climate change and improving energy-use efficiency are focuses of environmental research. A tax on energy use is a potential policy approach. Welfare analysis is useful when considering such an approach, especially in a developing country where poor households face a lack of substitutability away from energy-intensive goods and a high energy share in total expenditure. This study investigates the impacts of energy taxes on household welfare in Vietnam by fitting household survey data to a multi-good partial equilibrium model. It finds that a tax on energy goods (coal, gasoline, electricity, other fuels) would reduce consumer welfare, and that the size of the effect varies across households. The distributional effect is neither regressive nor progressive. The study discusses the importance of complementary programs, including the use of tax revenue to support poor households.
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