Policy & governance
Environmental tax
Definition
An environmental (environmentally related) tax is a compulsory, unrequited payment to general government levied on tax bases deemed to be of particular environmental relevance — such as energy products, transport, pollution and resources (OECD/Eurostat statistical definition). The definition follows the tax base, not the stated purpose: a fuel tax introduced for revenue reasons has the same environmental effect as one introduced for climate reasons.
References
tax-base definition, instrument context
tax-base approach, motivation excluded, SEEA consistency
Overview
What it means
Environmental taxes work by changing relative prices to steer producer and consumer behaviour, complementing or replacing command-and-control regulation; Eurostat's statistical guide (2024) operationalises the concept for cross-country comparison, consistent with the SEEA and OECD usage.
How it is used
Used in fiscal policy (carbon taxes, energy duties, landfill and plastic taxes), environmental fiscal reform and double-dividend debates; monitored in OECD/Eurostat databases.
Why it matters
Taxation is among the most powerful and revenue-generating environmental instruments, and a central element of green fiscal reform.