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Carbon Pricing, Growth and the Environment

Carbon Pricing, Growth and the Environment

Critical Issues in Environmental Taxation series

Edited by Larry Kreiser, Ana Yábar Sterling, Pedro Herrera, Janet E. Milne and Hope Ashiabor

The emphasis of the book lies in finding critical solutions to global climate change including chapters on environmental fiscal reform and unemployment in Spain, EU structural and cohesion policy and sustainable development, ecological tax reform in Europe and Asia, Australia’s carbon pricing mechanism, and many other timely topics.

Chapter 3: Decentralized environmental taxation: a preliminary assessment

Fiorenza Carraro and Andrea Zatti

Subjects: economics and finance, environmental economics, public finance, environment, climate change, environmental economics, law - academic, tax law and fiscal policy


Green taxes are policy instruments capable of enhancing environmental protection and collecting revenues at the same time. For these reasons the issue of raising new fiscal resources through environmentally related levies has been widely discussed in the last two decades (Oates, 1995; Fullerton et al., 2008; Ekins, 2009; Green Fiscal Commission, 2009, 2010). The subject has attracted renewed attention in the context of the recent worldwide economic crisis, where the opportunity of ‘greening taxation systems’ is seen as a promising tool to raise taxes and correct budget imbalances in a more ‘growth friendly’ way (European Commission, 2010). To this day the investigation of the budgetary role of green taxes has been mainly (or almost completely) concentrated on national fiscal systems, while the local dimension has been largely ignored. In our opinion, this represents a gap to be filled, especially in view of the growing interest demonstrated towards both fiscal decentralization and environmental taxation. As a matter of fact, environmental taxes, or at least some of them – construction fees, park and road pricing, final energy consumption taxes, car registration and circulation taxes, charges on tourism, land use and occupation fees – are strongly interrelated with the territorial context, and, accordingly, can represent an effective means for making citizens and city users pay for the services they benefit from, or for the external effects they generate. According to the most recent theoretical and political debates, this perspective can be justified by at least three kinds of reasons.

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