Environmental taxation : the utilisation of fiscal instruments in environmental policy

Abstract

This thesis examines the concept of environmental taxation and the proliferation of fiscal instruments for environmental protection in Europe. In recent years Governments have had to restructure environmental policy in order to tackle the ever-increasing and complex environmental problems. Environmental taxes have been advocated as an alternative or supplement to command-and-control type of regulations in environmental policy which pose limitations to complete and effective environmental action. The mandatory approach inherent in these policies gives regulates few incentives to improve their environmental performance on their own initiative. On the other hand, environmental taxes 'force' producers and consumers to take environmental concerns into account and to minimise, as far as possible, use and wastage of energy and other resources. They are considered to be the key to the integration of environmental considerations into other policy areas, this integration being the basis to a sustainable development. An ecotax is far from a typical environmental policy instrument and cannot be classified as a 'pure' tax. Its primary goal is that of creating an incentive towards improved environmental behaviour and the revenue-raising aspect, which characterises taxation, is secondary. This thesis will explore the recent trend in making fiscal and environmental policies mutually reinforcing. It provides a general overview of the concept of environmental taxation, explaining the raison d'etre of such fiscal instruments and outlining the green tax reform process embarked upon by EU Member States. Those aspects of EU policy which must be taken into consideration by Member States when drafting environmental tax laws, in order to ensure that the measures do not conflict with legal obligations under the Treaty, are also analysed. In conclusion, this thesis outlines Malta's environmental situation and the status of Maltese environmental policy, in particular in view of the upcoming accession to the European Union. It provides a brief appraisal of the possibility of utilising fiscal instruments for environmental policy reasons and the concerns which may be raised in this regard.