Environmental taxation: practical and theoretical aspects

Abstract

The environmental degradation caused by economic development has increasingly attracted society’s attention. It is widely understood that corporate behavior must be brought into line with environmental conservation objectives. Two means towards this end have been proposed: so-called command and control instruments and economic instruments that use market policies and fiscal incentives. This article examines the use of tributary instruments to promote the internalization of environmental costs; the theoretical groundwork is provided by economic theory, where the negative externality of pollution has been observed. Domestic and international experience in the application of taxation as an environmental policy instrument is examined.