Environmental taxes

Updated: Aug 20, 2021

Taxes that are used, or proposed, to achieve environmental objectives. For example, an energy tax, such as a tax on motor fuels, will lead to a reduction in emissions and contribute to the control of CO2. Environmental taxes can be used instead of, or alongside, direct controls on quantity. The use of environmental taxes is justified by the theory of extemalities and they are a special case of Pigouvian taxes. An important example is the carbon tax which has been proposed as a means of combating global warming. See also carbon tax; green tax.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
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James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.