TAILIEUCHUNG - Vietnam’s environment protection tax: Possible impacts and incidence
Vietnam’s environment protection tax: Possible impacts and incidence. This paper predicts economic and environmental impacts and incidence, in short term and in long tem, of the implementation of Law on Environment Protection Tax (EPT) recently promulgated by the National Assembly and coming into force by the beginning of 20121. | Journal of Economics and Development , , April 2011, pp. 5 - 18 ISSN 1859 0020 Vietnam’s environment protection tax: Possible impacts and incidence Nguyen Van Chan National Economics University, Vietnam Ian Coxhead University of Wisconsin-Madison, USA Abstract This paper predicts economic and environmental impacts and incidence, in short term and in long tem, of the implementation of Law on Environment Protection Tax (EPT) recently promulgated by the National Assembly and coming into force by the beginning of 20121. The forecasts result from simulation scenarios run on an Applied General Equilibrium (AGE) model for the Vietnamese economy, using General Equilibrium Modeling Software (GEMPACK). Depending on the different assumptions about factors’ mobility, the numerical results of simulations show a relatively large short-run decline in the GDP growth rate, and smaller declines in the long run. In general, following the model results it seems difficult to expect that application of the EPT would directly bring positive economic effects2. The benefits of the EPT should be drawn from that the natural environment is improved and therefore the quality of life would be better. The simulation results also emphasize the necessity of government accompanying policies and measures, such as use/ redistribute the EPT revenues in different programs aiming to improve the natural environment and to assist the strongly energy- dependent industries, to help the seriously suffering households. Our further research plan is precisely to run some model simulations on possible impacts of such kind of macro policies. Keywords: environment protection tax, general equilibrium model, Vietnamese economy, macro- and micro –simulations, Gempack. Journal of Economics and Development 5 Vol. 13, , April 2011 1. Introduction Vietnam has recently adopted its first law on environment protection tax (EVN)1, and expects to implement it from 1 January 2012. As in other countries, .
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