The distributional effects of emissions taxation in Brazil and their implications for climate policy

- We measure the distributive impact of a taxation policy of GHG emissions in Brazil.
- Poorest households have the highest expenditure emissions coefficient.
- The poorest households are most affected by both reducing consumption and labor income.
- Overall, the taxation was slightly regressive and had a small negative impact on output.

The emission of greenhouse gases (GHG) generated by human activity is a major cause of global warming and climate change. There is considerable debate about the choice of the best mechanism to reduce emissions under a climate policy. The aim of this paper is to measure the impact of a policy of taxing GHG emissions on the Brazilian economy as a whole and on different household groups based on income levels in 2009. The following databases were used: Supply and Use Tables, Household Budget Survey, National Household Sample Survey and emissions data from the Brazilian Ministry of Science and Technology and Innovation. A price system from a national input-output model that incorporates the intensity of GHG emissions is used, as well as a consumption vector broken down into ten representative households with different income levels. The main results indicate that this taxation system was slightly regressive and had a small negative impact on output. There were, however, significant emissions reductions.