Régulation et Environnement

Du 23/03/2020 de 12:00 à 13:00

salle R1-13, campus Jourdan - 75014 Paris

LAUKKANEN Marita (VATT)

ANNULE. Energy Taxes and Manufacturing Firm Performance: Evidence from Finland's Green Tax Reform

This paper seeks to evaluate the effect of energy taxes on the economic and environmental performance of manufacturing firms. We examine these issues in the context of Finland’s green energy tax reform that substantially increased the excise taxes on energy inputs, with the aim of promoting energy efficiency and reducing CO2-emissions. The preparation of the tax reform was accompanied by controversy over the predicted effects on manufacturing firm competitiveness, with the consequence that firms above a certain energy tax threshold were granted an exemption from energy taxes. While firms below the threshold pay energy taxes in full, firms above the threshold are refunded up to 85 percent of their energy taxes. Exempt and non-exempt firms, and in particular plants within these firms, can be otherwise very similar. The exemption rule allows us to compare plants that operate in the same manufacturing sectors and have otherwise similar history, but have been subject to different effective tax rates since the tax reform. Overall the results are most compatible with no important effect of the energy tax refund on employees, wages or energy use on average, and, if anything, a negative impact on gross output and energy efficiency.