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Cover of: Distributional Effects of Carbon Pricing in Germany
Wolf Heinrich Reuter, Malte Preuss, Christoph M. Schmidt

Distributional Effects of Carbon Pricing in Germany

Section: Fiscal Policy in Action
Volume 77 (2021) / Issue 3, pp. 287-316 (30)
Published 18.10.2021
DOI 10.1628/fa-2021-0011
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Using detailed German survey data on the consumption expenditure of households, we look at the distributional effects of a uniform carbon price. While carbon pricing itself results in a regressive effect, various strategies for redistributing the ensuing revenues could reverse this result, generating a progressive effect. The combined effect is less progressive if the revenue is used to reduce electricity taxes – which would spur the desired electrification of the energy system – and more progressive if it is used for per capita lump-sum transfers. However, adjustments to the German income support system could even out these differences.