Environmental taxation policy

Abstract

A wide range of instruments has been used to tackle the environmental problem. The tax path, which goes back to Pigou, especially in times of public finance crisis, has been adding advocates, including in the fight against climate change. Its effectiveness, efficiency, fairness, flexibility, information and administrative costs, political and institutional acceptability and behavioural dimension should be considered. Only the correct weighting of these criteria, in a broad cost-benefit analysis, might guide the policy-maker and the legislator in choosing the right tool in the face of other instrumental alternatives for environmental regulation.