Environmental Taxation

1. Introduction

As early as 1997, most jurisdictions worldwide agreed to reduce greenhouse gas (GHG) emissions to an acceptable level. After almost 30 years, the 192 signatories of the Kyoto Protocol are losing the fight against pollution.

Even when more than 50 countries have implemented a carbon pricing mechanism, either an emission trading scheme (Hereinafter “ETS”) or a carbon tax, total global carbon emissions have been increasing in the last decade with the exception of a reduction in 2020 during the COVID-19 lockdown.

S. 364This might be explained by an increase in population and globalization together with the ineffectiveness of the measures implemented to fight the GHG effect, in particular, the ETS and carbon taxes have limitations for reducing overall GHG as both have a limited scope, and carbon taxes rates might not be enough to modify the behavior of polluters.

Nevertheless, some other proposals have not yet been explored or implemented. One of the most interesting ones could be the carbon added tax (Hereinafter “CAT”) which several economists proposed at the end of the last century. This could be defined as a carbon tax with the characteristics of an indirect tax on emissions t...