What is a Green Tax?
Green Tax Definition
Green taxes, also known as environmental taxes and eco-taxes, are taxes designed around environmental needs.
They force individuals to internalize costs that would otherwise be paid by society as a whole so economic forces can arrive at an efficient level.
Green Tax Purpose
The purpose of green taxes are to:
- Discourage activities that are harmful to the environment by increasing the cost of the activity
- Generate revenue for environmental initiatives.
Green Tax Examples
An example of this first type, and the most common type of green tax, is carbon taxes.
Which are aimed at decreasing the level of CO2 in the atmosphere by making it more expensive to create CO2 waste.
Many European countries have such a scheme and the U.S. has considered implementing a carbon tax, but has not done so yet.
Carbon taxes are also believed to be a way to incentivize investment into alternative fuels until those alternatives become cheap enough to be cost-effective by themselves.
An example of this second type, fishing and hunting licenses are taxes on the use of public land where the proceeds go to wildlife preservation efforts.
These taxes are aimed at making the person using the public land, the hunter or fisherman, bear the cost of maintaining that land.
Green Tax Applications
Green taxes have been applied to:
- Air pollution
- Waste management
- Energy creation
- Noise pollution