Politická ekonomie 2023, 71(4):422-446 | DOI: 10.18267/j.polek.1391

Implications of Environmental Taxation for Economic Growth and Government Expenditures in Visegrad Group countries

Vera Mirović ORCID..., Branimir Kalaš ORCID..., Jelena Andrašić ORCID..., Nada Milenković ORCID...
University of Novi Sad, Faculty of Economics in Subotica, Serbia

The paper shows an econometric approach to environmental taxes, economic growth and go- vernment expenditures in Visegrad Group (VG) countries from 1995 to 2018. The aim of this research is to explore how environmental taxes affect economic growth in Czechia, Hungary, Poland and Slovakia in the observed period. The subject of the research is to identify the relationship between total environmental tax revenues, energy tax revenues, transport tax revenues and economic growth. Also, empirical research includes the relation between environmental taxation and government expenditures to identify the character of their effects and influence on economic growth through government expenditures. The findings of VAR model I manifest that shocks in total environmental tax revenues and energy tax revenues positively and significantly affect the economic growth, whereas transport tax revenues have a negative and significant effect on economic growth. The results of VAR model II show that total environmental tax revenues are significantly positively related to government expenditures, which is not the case with energy tax revenues and transport tax revenues. Furthermore, empirical research finds a bidirectional causality between environmental taxes and economic growth, as well as unidirectional causality between environmental taxes and government expenditures in VG economies.

Keywords: Environment, taxes, economic growth, government expenditure, VG economies
JEL classification: H23, O11, O44

Received: October 14, 2022; Revised: January 16, 2023; Accepted: February 6, 2023; Prepublished online: May 4, 2023; Published: September 6, 2023  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Mirović, V., Kalaš, B., Andrašić, J., & Milenković, N. (2023). Implications of Environmental Taxation for Economic Growth and Government Expenditures in Visegrad Group countries. Politická ekonomie, 71(4), 422-446. doi: 10.18267/j.polek.1391
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Abdullah, S., Morley, B. (2014). Environmental Taxes and Economic Growth: Evidence from Panel Causality Tests. Energy Economics, 42, 27-33, https://doi.org/10.1016/j.eneco.2013.11.013 Go to original source...
    2. Andrašić, J., Kalaš, B., Mirović, V., et al. (2018). Econometric modelling of tax impact on economic growth: Panel evidence from OECD countries. Economic Computation and Economic Cybernetics Studies and Research, 52(4), 211-226, https://doi.org/10.24818/18423264/52.4.18.14 Go to original source...
    3. Andrei, J., Mieila, M., Popescu, G. H., et al. (2016). The Impact and Determinants of Environmental Taxation on Economic Growth Communities in Romania. Energies, 9(11), 1-11, https://doi.org/10.3390/en9110902 Go to original source...
    4. Angelopoulos, K., Economides, G., Philippopoulos, A. (2013). First-and second-best allocations under economic and environmental uncertainty. International Tax and Public Finance, 20(3), 360-380, https://doi.org/10.1007/s10797-012-9234-z Go to original source...
    5. Annicchiarico, B., Di Dio, F. (2015). Environmental policy and macroeconomic dynamics in a new Keynesian model. Journal of Environmental Economics and Management, 69, 1-21, https://doi.org/10.1016/j.jeem.2014.10.002 Go to original source...
    6. Bădîrcea, R. M., Florea, N. M., Manta, A. G., et al. (2020). Comparison between Romania and Sweden Based on Three Dimensions: Environmental Performance, Green Taxation and Economic Growth. Sustainability, 12(9), 1-17, https://doi.org/10.3390/su12093817 Go to original source...
    7. Bhattacharyya, C., Gupta, M. R. (2021). Unionised labour market, environment and endogenous growth. International Review of Economics & Finance, 72, 29-44, https://doi.org/10.1016/j.iref.2020.10.005 Go to original source...
    8. Castiglione, C., Infante, D., Smirnova, J. (2014). Is There Any Evidence on the Existence of an Environmental Taxation Kuznets Curve? The Case of European Countries under Their Rule of Law Enforcement. Sustainability, 6(10), 7242-7262, https://doi.org/10.3390/su6107242 Go to original source...
    9. Chan, Y. T. (2019). Optimal Environmental Tax Rate in an Open Economy with Labor Migration - An E-DSGE Model Approach. Sustainability, 11(19), 1-38, https://doi.org/10.3390/su11195147 Go to original source...
    10. Davidović, D., Harring, N., Jagers, S. C. (2019). The contingent effects of environmental concern and ideology: institutional context and people's willingness to pay environmental taxes. Environmental Politics, 29(4), 1-23, https://doi.org/10.1080/09644016.2019.1606882 Go to original source...
    11. De Pascale, G., Fiore, M., Contò, F. (2021). Short and long run environmental tax buoyancy in EU-28: a panel study. International Economics, 168, 1-9, https://doi.org/10.1016/j.inteco.2021.07.005 Go to original source...
    12. Dökmen, G. (2012). Environmental Tax and Economic Growth: A Panel VAR Analysis. Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 40, 43-65.
    13. Fischer, C., Springborn, M. (2011). Emissions targets and real business cycle: Intensity targets versus caps or taxes. Journal of Environmental Economics and Management, 62(3), 352-366, https://doi.org/10.1016/j.jeem.2011.04.005 Go to original source...
    14. Fischer, C., Heutel, G. (2013). Environmental macroeconomics: Environmental policy, business cycles, and directed technical change. Annual Review of Resource Economics, 5, 197-210. Go to original source...
    15. Gao, X., Zheng, H., Zhang, Y., et al. (2019). Tax Policy, Environmental Concern and Level of Emission Reduction. Sustainability, 11(4), 1-17, https://doi.org/10.3390/su11041047 Go to original source...
    16. Gebregiorgs, M. T. (2018). Towards Sustainable Waste Management through Cautious Design of Environmental Taxes: The Case of Ethiopia. Sustainability, 10(9), 1-23, https://doi.org/10.3390/su10093088 Go to original source...
    17. Golušin, M., Munitlak Ivanović, O., Filipović, S., et al. (2013). Environmental taxation in the European Union - Analysis, challenges, and the future. Journal of Renewable and Sustainable Energy, 5(4), 1-13, https://doi.org/10.1063/1.4817963 Go to original source...
    18. Grdinić, M., Drezgić, S., Blažić, H. (2017). An Empirical Analysis of the Relationship between Tax Structures and Economic Growth in CEE Countries. Ekonomický časopis, 65(5), 426-447.
    19. Halkos, G. E., Paizanos, E. A. (2013). The effect of government expenditure on the environment: An empirical investigation. Ecological Economics, 91, 48-56, https://doi.org/10.1016/j.ecolecon.2013.04.002 Go to original source...
    20. Harring, N., Jagers, S. C. (2013). Should we trust in values? Explaining public support for pro-environmental taxes. Sustainability, 5(1), 210-227, https://doi.org/10.3390/su5010210 Go to original source...
    21. Hassan, M., Oueslati, W., Rousselière, D. (2020). Environmental taxes, reforms and economic growth: an empirical analysis of panel data. Economic Systems, 44(3), 1-47, https://doi.org/10.1016/j.ecosys.2020.100806 Go to original source...
    22. He, P., Ya, Q., Chengfeng, L., et al. (2019). Nexus between Environmental Tax, Economic Growth, Energy Consumption, and Carbon Dioxide Emissions: Evidence from China, Finland, and Malaysia Based on a Panel-ARDL Approach. Emerging Markets Finance and Trade, 57(3), 1-15, https://doi.org/10.1080/1540496X.2019.1658068 Go to original source...
    23. He, P., Sun, Y., Shen, H., et al. (2019). Does Environmental Tax Affect Energy Efficiency? An Empirical Study of Energy Efficiency in OECD Countries Based on DEA and Logit Model. Sustainability, 11(14), 1-21, https://doi.org/10.3390/su11143792 Go to original source...
    24. He, P., Ning, J., Yu, Z., et al. (2019). Can Environmental Tax Policy Really Help to Reduce Pollutant Emissions? An Empirical Study of a Panel ARDL Model Based on OECD Countries and China. Sustainability, 11(16), 1-32, https://doi.org/10.3390/su11164384 Go to original source...
    25. Hu, B., Dong, H., Jian, P., et al. (2020). Analysis of the Applicable Rate of Environmental Tax through Different Tax Rate Scenarios in China. Sustainability, 12(10), 1-14, https://doi.org/10.3390/su12104233 Go to original source...
    26. Hysa, E., Kruja, A., Rehman, N. U., et al. (2020). Circular Economy Innovation and Environmental Sustainability Impact on Economic Growth: An Integrated Model for Sustainable Development. Sustainability, 12(12), 1-14, https://doi.org/10.3390/su12124831 Go to original source...
    27. Ivanová, E., Masárová, J. (2018). Performance evaluation of the Visegrad Group countries. Economic Research-Ekonomska Istraživanja, 31(1), 270-289, https://doi.org/10.1080/1331677x.2018.1429944 Go to original source...
    28. Klein, F., van den Bergh, J. (2021). The employment double dividend of environmental tax reforms: exploring the role of agent behavior and social interaction. Journal of Environmental Economics and Policy, 10(2), 1-25, https://doi.org/10.1080/21606544.2020.1819433 Go to original source...
    29. Kosonen, K., Nicodème, G. (2009). The role of fiscal instruments in environmental policy. EC Taxation Papers: Working Paper No. 19, https://doi.org/10.2778/12205 Go to original source...
    30. Labeaga, J., Labandeira, X. (2020). Economics of Environmental Taxes and Green Tax Reforms. Sustainability, 12(1), 1-3, https://doi.org/10.3390/su12010350 Go to original source...
    31. Lee, J. C., Won, Y. J., Jei, S. Y. (2019). Study of the Relationship between Government Expenditures and Economic Growth for China and Korea. Sustainability, 11(22), 1-11, https://doi.org/10.3390/su11226344 Go to original source...
    32. Liobikienė, G., Butkus, M., Matuzevičiūtė, K. (2019). The Contribution of Energy Taxes to Climate Change Policy in the European Union (EU). Resources, 8(2), 1-23, https://doi.org/10.3390/resources8020063 Go to original source...
    33. Lu, C., Meng, P., Zhao, X., et al. (2019). Assessing the Economic-Environmental Efficiency of Energy Consumption and Spatial Patterns in China. Sustainability, 11(3), 1-17, https://doi.org/10.3390/su11030591 Go to original source...
    34. Mardones, C., Cabello, M. (2019). Effectiveness of local air pollution and GHG taxes: The case of Chilean industrial sources. Energy Economics, 83, 491-500, https://doi.org/10.1016/j.eneco.2019.08.007 Go to original source...
    35. Miceikienė, A., Čiulevičienė, V., Rauluškevičienė, J., et al. (2018). Assessment of the Effect of Environmental Taxes on Environmental Protection. Ekonomický časopis, 66(3), 286-308.
    36. Mikušová Meričková, B., Nemec, J., Murray Svidroňová, M., et al. (2017). Analysis of the Relationship between the Size and Structure of Public Expenditure and Socio-economic Development. Ekonomický časopis, 65(4), 320-333.
    37. Mitić, P., Munitlak Ivanović, O., Zdravković, A. (2017). A Cointegration Analysis of Real GDP and CO2 Emissions in Transitional Countries. Sustainability, 9(4), 1-18, https://doi.org/10.3390/su9040568 Go to original source...
    38. Nuţă, F. M., Tabără, N., Nuţă, A. C., et al. (2015). An assessment upon the environmental policy in Romania. Economic Research-Ekonomska Istraživanja, 28(1), 641-649, https://doi.org/10.1080/1331677x.2015.1083874 Go to original source...
    39. Piciu, G. C., Trica, C. L. (2012). Assessing the Impact and Effectiveness of Environmental Taxes. Procedia Economics and Finance, 3, 728-733, https://doi.org/10.1016/S2212-5671(12)00221-3 Go to original source...
    40. Radulescu, M., Sinisi, C. I., Popescu, C., et al. (2017). Environmental Tax Policy in Romania in the Context of the EU. Sustainability, 9(11), 1-20, https://doi.org/10.3390/su9111986 Go to original source...
    41. Radulescu, M., Serbanescu, L., Sinisi, C. I. (2019). Consumption vs. Investments for stimulating economic growth and employment in the CEE Countries - a panel analysis. Economic Research - Ekonomska istraživanja, 32(1), 2329-2353, https://doi.org/10.1080/1331677X.2019.1642789 Go to original source...
    42. Sun, Y., Mao, X., Yin, X., et al. (2021). Optimizing carbon tax rates and revenue recycling schemes: Model development, and a case study for the Bohai Bay area, China. Journal of Cleaner Production, 296, 1-9, https://doi.org/10.1016/j.jclepro.2021.126519 Go to original source...
    43. Xiao, B., Niu, D., Guo, X., et al. (2015). The Impacts of Environmental Tax in China: A Dynamic Recursive Multi-Sector CGE Model. Energies, 8(8), 7777-7804, https://doi.org/10.3390/en8087777 Go to original source...
    44. Zhang, Z., Khan, I., Zafar, M. W. (2022). Assessing environmental quality through natural resources, energy resources, and tax revenues. Environmental Science and Pollution Research. 29, 89029-89044, https://doi.org/10.1007/s11356-022-22005-z Go to original source...
    45. Zheng, Y., Zheng, H., Ye, X. (2016). Using Machine Learning in Environmental Tax Reform Assessment for Sustainable Development: A Case Study of Hubei Province, China. Sustainability, 8(11), 1-20, https://doi.org/10.3390/su8111124 Go to original source...
    46. Zhou, R., Segerson, K. (2012). Are Green Taxes a Good Way to Help Solve State Budget Deficits? Sustainability, 4(6), 1329-1353, https://doi.org/10.3390/su4061329 Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content