No. 83: Who bears the emission tax burden? Evidence from capital investments

Year: 2022

Type: Working Paper

Abstract

This paper examines who bears the economic burden of environmental taxes by studying investment responses. Using private firms from Spain and the introduction of an emission tax in 2013 in the Autonomous Community Valenciana, we show that the investment response does not depend on the level of pollution but on economic factors. Investments of firms operating in highly competitive markets, firms with low pricing power, and firms with low financial flexibility are the most affected by environmental taxes. In addition, we find that employees bear part of the emission tax burden. Overall, our results indicate that emission taxes affect not only the polluters but also other firms and stakeholders.

Publication Information

TRR 266 researchers

Martin Jacob IESE Business School

DOI

DOI Link

To cite this article

Jacob, M., & Zerwer, K. (2022). Environmental taxes and corporate investment. TRR 266 Accounting for Transparency Working Paper Series No. 83. https://dx.doi.org/10.2139/ssrn.4094069

Related Projects

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Investment Effects of Multidimensional Taxation

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Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, Goethe University Frankfurt, University of Cologne and Leibniz University Hannover who share the same research agenda.