Author：Jing Cao
Date：2011-01-07
Summary：
A major concern with carbon pricing to reduce emissions is that the burden of the costs arising from the policy might fall disproportionately on poorer households. In this paper I conduct an incidence analysis of carbon tax in China, using a computable general equilibrium (CGE) model and the Chinese urban household expenditure survey data. I measure the incidence of carbon tax and compare the differences when ranking families due to their annual income or life-time income. I also decompose the tax burden of carbon tax into both direct and indirect components. My results show that in general, carbon tax appears to be regressive using both annual income and life-time income approaches. Therefore, appropriate income tax adjustment or other transfer programs need to be considered to neutralize these adverse distributional effects.
Keywords：Carbon Tax, Distributional Effects, CGE Model, China
