Political uncertainty and the earmarking of environmental taxes

摘要: Abstract Far from being used to secure a ‘double dividend’ by reducing distorting taxes, revenues environmental taxes seem quite often be earmarked particular spending programs. In the US, for example, range of such feed into trust funds. Such earmarking runs counter standard notions good practice in taxing and spending. This paper develops explores an explanation apparent inefficiencies terms political uncertainty: roughly, green incumbent may chose earmark if efficiency loss doing so is outweighed value constraining subsequent potentially non-green policy-makers ‘wasting’ funds raised. It emerges, that those most likely are politicians who politically weak, then enables policy-maker set corrective tax higher than they otherwise would but nevertheless lower Pigovian tax.