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The role of fiscal instruments in environmental policy

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  • Katri Kosonen
  • Gaëtan Nicodème

Abstract

Environmental protection is one of Europe's key values. The EU has set clear policy objectives to achieve its environmental goals. The EU has favoured market-based instruments, among which fiscal instruments to tackle the climate change problem. This paper takes a policy-making perspective and provides an overview of key issues on the role of fiscal instruments in energy and environmental policies. It describes fiscal instruments as cost-effective means to promote environmental goals and highlights in which cases taxes and other types of fiscal instruments can usefully complement each other to achieve environmental target.

Suggested Citation

  • Katri Kosonen & Gaëtan Nicodème, 2009. "The role of fiscal instruments in environmental policy," Working Papers CEB 09-026.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:09-026
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    2. European Commission, 2013. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2013 Report," Taxation Papers 38, Directorate General Taxation and Customs Union, European Commission.
    3. European Commission, 2011. "Tax Reforms in EU Member States 2011: tax policy challenges for economic growth and fiscal sustainability," Taxation Papers 28, Directorate General Taxation and Customs Union, European Commission.
    4. Vollebergh, Herman, 2013. "Environmental Taxes and Green Growth," Other publications TiSEM 9efd8e7a-397e-428f-95be-c, Tilburg University, School of Economics and Management.
    5. Van Bon Nguyen, 2024. "Does governance contribute to the public spending - CO2 emissions nexus in developing economies? Policy lessons for sustainable development," Public Sector Economics, Institute of Public Finance, vol. 48(1), pages 79-101.
    6. Giliberto Capano & Andrea Lippi, 2017. "How policy instruments are chosen: patterns of decision makers’ choices," Policy Sciences, Springer;Society of Policy Sciences, vol. 50(2), pages 269-293, June.
    7. Margit Schratzenstaller-Altzinger & Alexander Krenek, 2016. "Sustainability-oriented EU Taxes:The Example of a European Carbon-based Flight Ticket Tax," WIFO Studies, WIFO, number 58888.
    8. Grzegorz Przekota & Anna Szczepańska-Przekota, 2022. "Pro-Inflationary Impact of the Oil Market—A Study for Poland," Energies, MDPI, vol. 15(9), pages 1-19, April.
    9. Yasser A. AL-Rawi & Yusri Yusup & Essa Ahmed & Ali F. Ali & Sofri Bin Yahya, 2023. "An examination of environmental taxes from the Islamic and Shariah perspectives," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 13(1), pages 141-155, March.
    10. European Commission, 2012. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2012 Report," Taxation Papers 34, Directorate General Taxation and Customs Union, European Commission.
    11. Ivan Hajdukovic, 2021. "Interactions among macroeconomic policies, the energy market and environmental quality," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 861-913, October.
    12. Alexander Krenek & Margit Schratzenstaller, 2017. "Sustainability-oriented tax-based own resources for the European Union: a European carbon-based flight ticket tax," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(4), pages 665-686, November.
    13. Rajat Verma & K Gayithri, 2018. "Environmental fiscal instruments: A few international experiences," Working Papers 409, Institute for Social and Economic Change, Bangalore.
    14. Yu‐Fu Chen & Michael Funke, 2010. "Booms, Recessions And Financial Turmoil: A Fresh Look At Investment Decisions Under Cyclical Uncertainty," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(3), pages 290-317, July.
    15. Borozan, Djula, 2019. "Unveiling the heterogeneous effect of energy taxes and income on residential energy consumption," Energy Policy, Elsevier, vol. 129(C), pages 13-22.
    16. Fendrich, Arthur Nicolaus & Barretto, Alberto & Sparovek, Gerd & Gianetti, Giovani William & da Luz Ferreira, Jaqueline & de Souza Filho, Carlos Frederico Marés & Appy, Bernard & de Guedes, Carlos Mar, 2022. "Taxation aiming environmental protection: The case of Brazilian Rural Land Tax," Land Use Policy, Elsevier, vol. 119(C).
    17. Isabelle Cadoret & Emma Galli & Fabio Padovano, 2020. "How do governments actually use environmental taxes?," Applied Economics, Taylor & Francis Journals, vol. 52(48), pages 5263-5281, October.
    18. Jean Andrei & Mihai Mieila & Gheorghe H. Popescu & Elvira Nica & Manole Cristina, 2016. "The Impact and Determinants of Environmental Taxation on Economic Growth Communities in Romania," Energies, MDPI, vol. 9(11), pages 1-11, November.
    19. Doris Prammer, 2011. "Quality of taxation and the crisis: Tax shifts from a growth perspective," Taxation Papers 29, Directorate General Taxation and Customs Union, European Commission.
    20. Spyridaki, Niki-Artemis & Banaka, Stefania & Flamos, Alexandros, 2016. "Evaluating public policy instruments in the Greek building sector," Energy Policy, Elsevier, vol. 88(C), pages 528-543.
    21. Spengel, Christoph & Heckemeyer, Jost Henrich & Bräutigam, Rainer & Nicolay, Katharina & Klar, Oliver & Stutzenberger, Kathrin, 2016. "The effects of tax reforms to address the debt-equity bias on the cost of capital and on effective tax rates," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, volume 65, number 148156.
    22. Djula Borozan, 2018. "Efficiency of Energy Taxes and the Validity of the Residential Electricity Environmental Kuznets Curve in the European Union," Sustainability, MDPI, vol. 10(7), pages 1-16, July.
    23. Rajat Verma & K. Gayithri, 2018. "Environmental Fiscal Instruments: A Few International Experiences," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 12(3), pages 333-368, August.
    24. Bartocci, Anna & Pisani, Massimiliano, 2013. "“Green” fuel tax on private transportation services and subsidies to electric energy. A model-based assessment for the main European countries," Energy Economics, Elsevier, vol. 40(S1), pages 32-57.

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    More about this item

    Keywords

    taxation; environmental policy; VAT; fiscal incentives;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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