The distributional implications of a carbon tax in Ireland

We study the effects of carbon tax and revenue recycling across the income distribution in the Republic of Ireland. In absolute terms, a carbon tax of h20/tCO2 would cost the poorest households less than h3/week and the richest households more than h4/week. A carbon tax is regressive, therefore. However, if the tax revenue is used to increase social benefits and tax credits, households across the income distribution can be made better off without exhausting the total carbon tax revenue. & 2008 Elsevier Ltd. All rights reserved.