Environmental Taxation

Marcelo Henrique Santos Justo

1. Introduction

Taxation in society is inherently multifaceted, functioning not merely as a fiscal instrument but also as a mechanism for guiding economic behavior and embodying the state.’ evolving values.

S. 548The primary function of taxation is to generate revenue which is essential for the functioning of any government, but it shall not be reduced to it. Beyond revenue collection, taxation plays a critical role in stabilizing and managing economies once it can mitigate financial volatility, curb currency speculation, and be perceived as an instrumental to influence behavior by discouraging or encouraging certain activities.

The last concept can be directly perceived in environmental taxes rooted in Pigouvian taxes which seeks to correct market inefficiencies by internalizing external costs. In other words, businesses or individuals who generate negative externalities - such as air pollution, water contamination, or excessive carbon emissions should bear the financial burden of the harm they cause.

Building on this concept, environmental taxes are frequently discussed in literature as an effective policy tool for reducing carbon emissions or making environmen...