early general equilibrium models tend to show by contrast that environmental taxes interact with existing taxes to exacerbate rather than improve tax inefficiencies implying that environmental regulation would lead to an overall increase in business costs discouraging employment and investment bovenberg and de mooij parry however extensions of these earlier models show that recycling environmental taxes can in fact have a beneficial effect on employment but that this depends on the characteristics of the preexisting tax regime bento applications of such models on a regional basis have indicated for example that using carbon taxes to finance reductions in distortionary capital tax can lead to an overall growth effect takeda that the recycling of energy taxes in taiwan to offset income taxes would stimulate domestic consumption and investment bor and huang that that environmental taxation can bring economic benefits in turkey when fuels are the primary source of pollutant emissions kumbaroglu