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Tax Policy and the Environment: Theory and Practice

Author

Listed:
  • Mr. David C Nellor
  • Mr. Ronald T. McMorran

Abstract

This paper provides a framework for examining environment taxes. It reviews the theoretical efficiency of three types of environment taxes: taxes on emissions or Pigouvian taxes; taxes on productive inputs or consumer goods whose use is related to environmental damage; and environment-related provisions in other taxes. A survey of environment taxes in 42 countries--drawn from developing countries, economies in transition, and industrial countries--illustrates that the use of environment taxes differs dramatically from the recommendations of environment tax theory. This divergence between the theory and practice of environment taxes can be attributed to several factors; environment taxes are difficult to implement, there are many factors that impede their effectiveness, and their introduction may be discouraged by their implications for other policy objectives.

Suggested Citation

  • Mr. David C Nellor & Mr. Ronald T. McMorran, 1994. "Tax Policy and the Environment: Theory and Practice," IMF Working Papers 1994/106, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1994/106
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    Citations

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    Cited by:

    1. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435, Elsevier.
    2. Whalley, John, 1999. "Environmental considerations in tax policy design," Environment and Development Economics, Cambridge University Press, vol. 4(1), pages 111-124, February.
    3. Morgenstern, Richard D., 1995. "Environmental Taxes: Dead or Alive?," Discussion Papers 10595, Resources for the Future.
    4. Daniel A. Brent & Lata Gangadharan & Anca Mihut & Marie Claire Villeval, 2019. "Taxation, redistribution, and observability in social dilemmas," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(5), pages 826-846, October.
    5. Evy Crals & Lode Vereeck, 2005. "Taxes, Tradable Rights and Transaction Costs," European Journal of Law and Economics, Springer, vol. 20(2), pages 199-223, September.
    6. Subhes C. Bhattacharyya, 1997. "Energy taxation and the environment: a developing country perspective," Natural Resources Forum, Blackwell Publishing, vol. 21(4), pages 273-280, November.

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