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Eco-Fiscal Tools and Municipal Finance: Current Practices and Opportunities

Author

Listed:
  • Jean-Philippe Meloche
  • Fanny Tremblay-Racicot

    (University of Toronto)

Abstract

Eco-fiscal tools are tax measures that target behaviour or the consumption of goods or services that contribute to environmental degradation. These taxes, fees, or charges correct market price signals to help internalize the social and environmental costs of individual choices, while providing financial resources to supply public goods and services. In Canada, an important part of the eco-fiscal debate focuses on carbon emissions (such as the carbon market and carbon taxes). Although central governments are backtracking on efforts to limit environmental degradation, municipalities are playing an increasingly important role in the eco-fiscal field. The tools they are using do not raise significant revenues, but they are helping to change behaviours. This paper explains the main arguments for the use of eco-fiscal tools and reviews the literature on their impact. It explores the range of eco-fiscal tools implemented by Canadian municipalities and proposes innovative tools that could be implemented in the future.

Suggested Citation

  • Jean-Philippe Meloche & Fanny Tremblay-Racicot, 2025. "Eco-Fiscal Tools and Municipal Finance: Current Practices and Opportunities," IMFG Papers 71, University of Toronto, Institute on Municipal Finance and Governance.
    • Handle: RePEc:mfg:wpaper:71
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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