Chapter

The Tax Structure and the Environment

Agnar Sandmo

in The Public Economics of the Environment

Published in print April 2000 | ISBN: 9780198297987
Published online November 2003 | e-ISBN: 9780191596858 | DOI: http://dx.doi.org/10.1093/019829798X.003.0005

Series: The Lindahl Lectures

The Tax Structure and the Environment

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The determination of a system of environmental taxes must be seen in conjunction with the design of the tax system as a whole. The present analysis is based on a model of optimal commodity taxation in the presence of environmental pollution. The main conclusion is that taxes should be designed both so as to minimize market distortions, and to give the right incentives to improve the environment. However, only the goods whose consumption or production actually generates pollution should include an ‘environmental component’. This is an example of the more general principle of the targeting of policy instruments.

Keywords: design; incentives; optimal taxation; pollution; targeting; tax systems

Chapter.  7630 words. 

Subjects: Economic Development and Growth

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