The Impacts of Economic and Environmental (Case Study CO2 and Tax in Iran)

Emissions tax is an environment protecting policies in economy context. This study also aims at investigating economic and environmental impacts of emissions taxation levied on CO2 emitted from fuel and production process in Iran. To get the objective a computable general equilibrium framework based on the Iranian social accounting matrix of 1999 was used. CO2 is taxed based on World Bank (2004) estimated damage cost. The results show that tax policy impact on emission and macroeconomic variables depend on whether energy subsidies are reformed. CO2 tax is more effective in emission reduction after energy subsidy reform while implementing it at the presence of energy subsidies does not induce significant effects.