Distributional Effects of Carbon Pricing in Germany
Using detailed German survey data on the consumption expenditure of households, we look at the distributional effects of a uniform carbon price. While carbon pricing itself results in a regressive effect, various strategies for redistributing the ensuing revenues could reverse this result, generating a progressive effect. The combined effect is less progressive if the revenue is used to reduce electricity taxes – which would spur the desired electrification of the energy system – and more progressive if it is used for per capita lump-sum transfers. However, adjustments to the German income support system could even out these differences.
Preuß, M., W. Reuter und C. Schmidt (2021), Distributional Effects of Carbon Pricing in Germany. FinanzArchiv/Public Finance Analysis, 77, 3, 287-316
DOI: 10.1628/fa-2021-0011