What is Environmental Taxation?
People often think of taxation and the environment as two entirely different worlds—two circles that do not intersect. Governments impose taxes to raise the revenues they need to operate; governments get involved in environmental matters to protect the public interest. However, the two circles do intersect. Governments can—and do—use tax policies to achieve environmental goals.
Environmental taxes come in many different forms, but as a general matter environmental tax measures either impose a tax cost on some product or activity that is environmentally damaging, or they give a tax benefit to some product or activity that is environmentally beneficial.
For example, the federal government imposes a significant excise tax on ozone-depleting chemicals, and it offers a tax credit to people who buy electric vehicles. In both instances, the tax code has altered the "price" of the commodity, injecting an important signal into the economic calculations that affect behavior.
All types of tax systems—income tax, estate tax, property tax, and excise tax—potentially can incorporate environmental tax measures, and all levels of government—local, state, and federal—can consider environmental taxes. Environmental taxes will not necessarily replace traditional environmental regulation. In some instances, they may complement regulation, and in others they may provide an option when regulation is not appropriate.
The Institute's Services
On a project-by-project basis, Vermont Law School's Environmental Tax Policy Institute will conduct research on a wide range of environmental tax issues. Potential projects could include:
- the application of environmental taxation to specific environmental issues, such as energy consumption, toxic waste, sprawl, water and air quality, and habitat protection;
- issues involved in the design of sound environmental taxes;
constitutional questions raised by the use of environmental taxes;
- assessments of the extent to which governments in the United States and around the world are using environmental taxes; and
- the role of environmental taxation compared with other approaches to environmental problems.
The projects may result in publications, white papers, and conferences or workshops. Anyone interested in exploring the potential for a project is invited to contact the Institute.
For More Information
For more information about the Environmental Tax Policy Institute, please contact:
Professor Janet E. Milne, Director
Environmental Tax Policy Institute
Vermont Law School
164 Chelsea Street
South Royalton, VT 05068 U.S.A.