Energy Taxes in the Netherlands: What are the Dividends?

In this paper the environmental and economic effects of the introduction of a unilateral energy tax in the Netherlands are analysed using an applied general equilibrium (AGE) model. The effects of a small user energy tax and a general energy tax are compared, while taking into account different tax recycling mechanisms. The model contains a great level of detail with respect to emissions and environmental indicators (greenhouse effect, acidification, eutrophication and waste), which is helpful for assessing environmental quality. The results show that the introduction of a small environmental tax reform not only improves the environment but also raises non-environmental welfare, which is due to an improvement of the efficiency of the tax structure. Copyright Kluwer Academic Publishers 1999applied general equilibrium model (AGE), environmental indicators, environmental tax reform, small open economy, unilateral energy tax,