Environmental Taxation

Héctor Pietrini Sanchez

1. Introduction

Over the past decades, countries have increasingly adopted long-term strategies to mitigate the impacts of global climate change and promote the transition to low-carbon economies. As part of these efforts, international environmental policies have been introduced to encourage environmentally sustainable practices thereby influencing both business operations and individual behaviors.

These policy instruments encompass a broad range of collective actions, including taxes, that could be commonly divided into two categories: tax instruments S. 524and tax incentives. Tax instruments involve a restriction or a limitation on the realization of harmful activity through the imposition of taxes or duties such as energy taxes, carbon, or other forms of environmental taxes. On the other hand, tax incentives are a positive mechanism that encourages sustainable behavior through granting a benefit or a reward such as tax credits or special deductions.

The purpose of this thesis is to explain what tax incentives are and their motivations to encourage and stimulate sustainable business development. It also considers whether, under the principle of tax equity, incentiv...