Environmental Taxation and Climate Change

Environmental Taxation and Climate Change

Achieving Environmental Sustainability through Fiscal Policy

Critical Issues in Environmental Taxation series

Edited by Larry Kreiser, Julsuchada Sirisom, Hope Ashiabor and Janet E. Milne

Containing an authoritative set of original essays, Environmental Taxation and Climate Change provides fresh insights and analysis on how environmental sustainability can be achieved through fiscal policy. Written by distinguished environmental taxation scholars from around the world, this timely volume covers a range of hotly debated subjects including carbon related taxation in OECD countries, implications of environmental tax reforms, innovative environmental taxation and behavioural strategies, as well as many other relevant topics.

Chapter 2: Implications of Environmental Tax Reforms: Revisited

Stefan Speck and David Gee

Subjects: economics and finance, environmental economics, environment, climate change, environmental economics, environmental law, law - academic, environmental law


Stefan Speck and David Gee 1. INTRODUCTION During the last two decades several European countries implemented an environmental tax reform (ETR) (Speck and Jilkova, 2009). ETR is a public policy tool that applies revenue-raising economic instruments (which may be taxes or auctioned permits in an emissions trading scheme) to resource use (including energy) and pollution, in order to increase resource productivity, employment and innovation and to help improve the environment. The generated revenues can be used for different policy purposes. ETRs implemented in Europe are characterised as tax-shifting programmes and thereby closely following the revenue-neutrality principle as the additional generated revenues have been generally recycled back to the economy by reducing other more economically damaging taxes, such as labour or capital taxes. ETR can be part of the public policy packages in developed countries, as well as in economies in transition and developing countries.1 However, whilst much can be learned from country experiences with ETR, the lessons learned in individual countries cannot be directly transferred to other countries: ETR must be specifically designed for the fiscal, economic, social and environmental conditions of each country. Experiences gained in several EU member states over 20 years show broadly positive results (EEA, 2005, and Barker et al., 2009a). There has been little progress with ETR overall. In fact, at EU 25 level the share of environmental taxes has been decreasing and is now (2008) at the lowest level compared with 1995 (Eurostat, 2010). The main barriers to ETR are the potential loss of...

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