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Environmental Taxes

61 Pages Posted: 4 Aug 2008  

Don Fullerton

University of Illinois at Urbana-Champaign - Department of Finance; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Andrew Leicester

Institute for Fiscal Studies (IFS)

Stephen Smith

University College London - Department of Economics

Date Written: July 2008

Abstract

This chapter provides an overview of key economic issues in the use of taxation as an instrument of environmental policy in the UK. It first reviews economic arguments for using taxes and other market mechanisms in environmental policy, discusses the choice of tax base, and considers the value of the revenue from environmental taxes. It is argued that environmental tax revenues do not significantly alter economic constraints on tax policy, and that environmental taxes need to be justified primarily by the cost-effective achievement of environmental goals. The chapter then assesses key areas where environmental taxes appear to have significant potential -- including taxes on energy used by industry and households, road transport, aviation, and waste. In some of these areas, efficient environmental tax design needs to make use of a number of taxes in combination -- a "multi-part instrument".

Suggested Citation

Fullerton, Don and Leicester, Andrew and Smith, Stephen, Environmental Taxes (July 2008). NBER Working Paper No. w14197. Available at SSRN: https://ssrn.com/abstract=1179867

Don Fullerton (Contact Author)

University of Illinois at Urbana-Champaign - Department of Finance ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
(217) 244-3621 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Andrew Leicester

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Stephen Smith

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
44-171-504 5882 (Phone)

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