Scandinavian Working Papers in Economics

Working Paper Series,
Swedish University of Agricultural Sciences, Department Economics

No 2017:2: Design of climate tax on food consumption

Ing-Marie Gren (), Emma Moberg, Elin Röös, Sarah Säll and Julius Andersson
Additional contact information
Ing-Marie Gren: Department of Economics, Swedish University of Agricultural Sciences, Postal: Box 7013, Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden
Emma Moberg: Department of Energy and Technology, Postal: Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden
Elin Röös: Department of Energy and Technology, Postal: Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden
Sarah Säll: Department of Economics, Swedish University of Agricultural Sciences, Postal: Box 7013, Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden
Julius Andersson: London School of Economics, Postal: London, UK

Abstract: This study examines appropriate design of climate taxes on consumption of food by constructing a simple theoretical model and exemplify the results on climate taxes on consumption of tomatoes and beef in Sweden. The theoretical results showed that i) existing taxes on greenhouse gases (GHG) should be considered to avoid double taxation, ii) taxes need to be differentiated between GHG (carbon dioxide, CO2, methane, CH4, and nitrous oxide, N2O, in present study) because of their different climate impact, and iii) suggested tax levels on GHG in the literature rest on quite different approaches to climate management. The calculations of climate taxes on tomatoes and beef in Sweden indicated considerable differences in the tax level depending on calculation method. The commonly applied suggestion of taxing carbon dioxide equivalents (CO2e) and disregard existing taxes on GHG emission results in a tax that is five times the appropriate tax for tomatoes and 2.5 times that for beef. The price increases on consumption of food due to a climate tax can thus show large variation depending on tax calculation method.

Keywords: climate tax on food; different GHG; double-taxation; tomatoes; beef; Sweden

JEL-codes: H23; Q18; Q52; Q58

35 pages, July 2, 2017

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