Int. J. of Sustainable Development   »   2000 Vol.3, No.2



Title: Using revenue from an energy tax to finance social security: a dynamic general equilibrium model for Switzerland


Author: Stefan Felder, Renger van Nieuwkoop


Address: Institute for Social Medicine, Epidemiology and Health Economics, Faculties of Medicine and Economics, Otto-von-Guericke-University of Magdeburg, Leipziger Strasse 44, D-39 120 Magdeburg, Germany. ECOPLAN, Thunstr. 22, CH-3005 Bern, Switzerland


Abstract: A substantial increase in the dependency ratio due to both population ageing and low economic growth will put pressure on social security systems. This paper analyses an ecological tax reform that uses revenues from an energy tax to finance reductions in either the wage or the value added tax. The simulation results based on a dynamic general equilibrium model for Switzerland show that increasing energy prices by 50% or 100% will substantially lower energy use, while decreasing the efficiency of the fiscal system only slightly. Furthermore, it turns out that the effects do not differ when an increase in the VAT substitutes part of the social security payroll tax.


Keywords: ageing; dynamic fiscal policy; environmental tax reform; social security.


DOI: 10.1504/IJSD.2000.001528


Int. J. of Sustainable Development, 2000 Vol.3, No.2, pp.136-145


Available online: 04 Jul 2003



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