{
  "title": "Tax Policy and the Environment: Theory and Practice",
  "publication": "IMF Working Papers, September 1, 1994",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/tax-policy-and-the-environment-theory-and-practice-1269",
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  "summary": "This paper provides a framework for examining environment taxes. It reviews the theoretical efficiency of three types of environment taxes: taxes on emissions or Pigouvian taxes; taxes on productive inputs or consumer goods whose use is related to environmental damage; and environment-related provis",
  "sections": [
    {
      "heading": "Framework and scope",
      "content": "- Provides a framework for examining environment taxes.\n- Reviews the theoretical efficiency of three types of environment taxes:\n  - taxes on emissions or Pigouvian taxes;\n  - taxes on productive inputs or consumer goods whose use is related to environmental damage;\n  - environment-related provisions in other taxes."
    },
    {
      "heading": "Survey of practice",
      "content": "- Presents a survey of environment taxes in 42 countries--drawn from developing countries, economies in transition, and industrial countries.\n- Illustrates that the use of environment taxes differs dramatically from the recommendations of environment tax theory."
    },
    {
      "heading": "Causes of divergence between theory and practice",
      "content": "- Environment taxes are difficult to implement.\n- There are many factors that impede their effectiveness.\n- Introduction of environment taxes may be discouraged by their implications for other policy objectives."
    },
    {
      "heading": "Substance: findings and themes",
      "content": "- Theoretical efficiency focus: Pigouvian taxes, input/consumer-good taxes, and tax provisions related to environmental outcomes.\n- Empirical observation: practice across 42 countries departs substantially from theoretical prescriptions.\n- Impediments and policy trade-offs are central to understanding why environment taxes are not applied as theory suggests."
    },
    {
      "heading": "Policy implications and considerations",
      "content": "- Implementation complexity must be addressed when designing environment taxes.\n- Effectiveness can be limited by multiple impeding factors; these should be identified and mitigated in policy design.\n- Trade-offs with other policy objectives can discourage adoption; consideration of distributional and broader fiscal impacts is needed.\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/tax-policy-and-the-environment-theory-and-practice-1269"
    }
  ],
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    "[Markdown version](/en/publications/wp/issues/2016/12/30/tax-policy-and-the-environment-theory-and-practice-1269/index.md)",
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    "Authors: David C Nellor, Ronald T. McMorran",
    "Published: September 1, 1994",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451947083.001",
    "Provides a framework for examining environment taxes.",
    "Reviews the theoretical efficiency of three types of environment taxes:",
    "Presents a survey of environment taxes in 42 countries--drawn from developing countries, economies in transition, and industrial countries.",
    "Illustrates that the use of environment taxes differs dramatically from the recommendations of environment tax theory.",
    "Environment taxes are difficult to implement.",
    "There are many factors that impede their effectiveness.",
    "Introduction of environment taxes may be discouraged by their implications for other policy objectives.",
    "Theoretical efficiency focus: Pigouvian taxes, input/consumer-good taxes, and tax provisions related to environmental outcomes.",
    "Empirical observation: practice across 42 countries departs substantially from theoretical prescriptions.",
    "Impediments and policy trade-offs are central to understanding why environment taxes are not applied as theory suggests.",
    "Implementation complexity must be addressed when designing environment taxes.",
    "Effectiveness can be limited by multiple impeding factors; these should be identified and mitigated in policy design.",
    "Trade-offs with other policy objectives can discourage adoption; consideration of distributional and broader fiscal impacts is needed."
  ],
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