The Survey of Welfare and Environmental Effects on the Green Tax & Decline Subsidy on Fuels in Iran by Using a Computable General Equilibrium Model

Document Type : Original Article


  One of the most important governments' challenges is the environmental crisis; therefore governments should strive to take various policies and programs to overcome environmental problems including air pollution or reduce negative effects of human functions on environment. This study has tried by using input- output table in 2001 and amount of pollutants and greenhouse gas emissions to survey of welfare and environmental effects on the green tax and decline subsidy on fuels . For this purpose, using MCP and software GAMS welfare changes with and without environmental impact, changes in energy demand and changes in three pollutants CO2, NOX and CH in the five tax scenarios have been studied. Results of study showed, green tax reduce demand for fossil fuel as intermediate input and final goods. If the environmental effects are considered , in the all scenarios, the welfare changes were positive and the welfare increase as the tax rate increases; in the other words, the increasing taxes on fossil fuels is desirable. In the both policy, the highest growth rate of the welfare is tax rate 10% (scenario III).     JEL Classification: Q43, Q51, Q53, R13, R15, R38