Taxation as a Policy Instrument for Environmental Transformation: Evaluations of Bulgarian Practice

The global challenges of climate change, natural resource depletion and the threat of environmental crises are ever-present in economic governance policies. Caring for the environment is not only a matter of awareness but also of financing. On the one hand, capital-intensive technical solutions are needed, for which a significant proportion of the costs are borne by general public expenditure and ultimately by society. On the other hand, designing national tax systems involves the challenge of aligning the classical functions of tax (fiscal, economic and social) with the environmental function of tax. Overall the paper focuses on the systematization and analysis of empirical evidence on the policy of environmental taxation in Bulgaria, as well as on the challenges associated with its implementation in an environmental and socio-economic context. To fulfil this objective and using the methods of dynamic analysis, comparison and synthesis, select indicators for fiscal environmentalism and environmental tax impact are examined. Furthermore, by applying regression-correlation and variance analysis, dependence consistent with the “double dividend” hypothesis is sought. The application of the chosen methodological approach reveals the fiscal and environmental dependencies and implications associated with environmental taxes in Bulgaria. Based on the data studied and analyzed, it is found that the forms of environmental taxation in the country are not explicitly designed to stimulate sustainable behavior of business entities, they are subordinated to national socio-economic policies, they have mainly fiscal significance and only indirect impact on environmentally harmful production and consumption behavior.