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| Author: | Kallbekken, S. Kroll, S. Cherry, T.L. |
| Title: | Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab |
| Journal: | Journal of Environmental Economics and Management
2011 : JUL, VOL. 62:1, p. 53-64 |
| Index terms: | tax evasion rationing environmental protection behavioural science costs revenue markets |
| Language: | eng |
| Abstract: | Tax-aversion reduces the likelihood of price rationing acting as a politically viable tool for protecting the environment. We investigate the case of the classic Pigouvian tax to control a negative externality, and discuss how recycling of revenues, labeling of the tax and information about its aim affects the support for taxation. The support for taxation is tested within a single-price market experiment, where purchases by certain buyers impose external costs on others. Observing behavior consistent with tax-aversion, evidence is found of recycling of the revenues to more narrowly targeted groups increasing support for taxation. Without narrow revenue recycling, labeling a Pigouvian instrument as a tax may substantially lower the likelihood of voter support. |
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