Does fiscal burden impede green transition? Income, taxation, clean energy, and ecological sustainability in sub‐Saharan Africa

Abstract

AbstractThis study examines the role of tax burden (TB) in the income–energy–environment nexus in sub‐Saharan Africa (SSA) using the ecological load capacity (ELC) factor as a sustainability indicator. Analyzing data from 1999 to 2021 using the method of moments quantile regression with the bootstrap variance algorithm, the results defy the load capacity curve hypothesis, revealing an inverted U‐shaped relationship between income and ELC. The turning point income is $3257.48 at the 10th quantile and $4317.23 at the 90th quantile. An increased renewable energy share in the consumption mix boosts ELC. Regarding TB, a U‐shaped curve exists between fiscal freedom and ELC, with significance at the 40th and 90th quantiles, with TB score turning points at 67.60 and 71.37, respectively. The Dumitrescu–Hurlin test uncovers bidirectional causality between ELC and the variables. TB affects income and renewable energy unidirectionally, while income and renewable energy have bidirectional causality. These findings suggest that higher taxes on households and businesses hinder the transition to a greener economy via income and energy consumption. An integrated policy approach is necessary to balance revenue generation with the preservation of ecological sustainability in SSA.