ABSTRACT
In line with Chile’s commitment as signed in the Paris Agreement against Climate Change, the Chilean Parliament approved a new tax on pollutant emissions to the atmosphere in 2014. A carbon tax was levied at a rate of $US5 per ton of C02 emitted by fixed sources over 50 MW thermal installed capacity. A price model has been conducted to assess the impact on prices, tax structure and private welfare. A database has been used for the Social Accounting Matrix up to 2013, which was specifically designed for this analysis. The new carbon tax provokes a slight inflationary impact of 0.09 %, higher on the power sector, including the electricity transportation and distribution sectors. After introducing this new tax, the weight on value aggregate tax is higher and private welfare decreases. A diminishing of GHG emissions around 1,800 Gg C02eq is estimated.
