Market Based Instruments
Show Less

Market Based Instruments

National Experiences in Environmental Sustainability

  • Critical Issues in Environmental Taxation series

Edited by Larry Kreiser, David Duff, Janet E. Milne and Hope Ashiabor

This detailed book explores how market based environmental strategies are used in various countries around the world. It investigates how successful sustainability strategies used by one country can be transferred and used successfully in other countries, with a minimum of new research and experimentation. Leading environmental taxation scholars discuss this question and analyse a set of key case studies.
Buy Book in Print
Show Summary Details

Chapter 1: Less pain, more gain: the potential of carbon pricing to reduce Europe’s fiscal deficits

John Ward, Robin Smale, Max Krahé and Jacqueline Cottrell

Extract

The over-riding challenge for many European governments today is to reduce major fiscal deficits with the least collateral damage to the economy. Fiscal consolidation remains a key policy driver in many EU countries. In March 2012, 25 European member states signed the Treaty on Stability, Coordination and Governance, containing a ‘fiscal compact’ to limit their structural deficit to 0.5 per cent of their gross domestic product (GDP) (1 per cent for low-debt countries), and to ensure that general government debt does not exceed, or is sufficiently declining towards, 60 per cent of GDP. In the current economic circumstances, there has been a tendency to perceive dealing with climate change as something that should take second place to fiscal consolidation, or as something that simply cannot be ‘afforded’. Carbon taxation, however, can be a significant source of fiscal revenue and can, therefore, contribute to fiscal re-balancing in Europe. Further, it causes less economic harm per unit of revenue than direct (that is, income) or other indirect taxes (such as Value Added Tax (VAT)), while also producing environmental benefits. Indeed, as noted by the Organisation for Economic Co-operation and Development (OECD, 2012): ‘Introducing or increasing taxes on polluting behaviour provides potentially a win-win option . . . Since many countries are committed to reducing greenhouse gases, the time is propitious for addressing fiscal consolidation and environmental protection jointly.’

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.