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Taxation is used by governments to create revenue and provide financial support in a wide variety of areas such as education, state pensions and health services. As well as providing financial support, taxes can also be used to persuade people to change their behaviour through incentives or disincentives.

Tree trunk and Ecotaxation. Image by Information for Action, a website for conservation and environmental issues offering solutions

Ecotaxation is concerned with taxes that relate directly to the environment. Ecotaxation is also known as Eco tax, Eco taxes, Eco-taxation, Eco-tax, Eco-taxes, Green taxation, Green taxes and Green-tax.

Here are some examples of Ecotaxation, and their purpose:

  • Emissions tax on motor vehicles to persuade people to purchase greener cars.
  • Energy tax, particularly on non renewable resources, to persuade manufacturers to research and make use of environmentally friendly energy sources such as solar power. As it is difficult to measure how much energy is wasted, a charge is made for energy as it enters the economy. This may include a rebate for renewable sources. A charge may also be applied for use of depletable energy.
  • Pollution taxes, where companies are charged for discharges into the environment that are above an agreed safe limit.
  • Application of tax for any use of land or water that stops it from being used for its natural purpose. This is used to encourage people to treat land and water with more respect.

One way to describe the necessity for green taxes is to make people pay for externalities. An externality is a cost incurred in a transaction that actually has no direct effect on either of the parties involved. Consider the situation of a company on the banks of a river. Competition is high, so instead of paying someone to come and take their waste product away, they dump it in the river. The producer and the consumer end up with a cheaper product. The only cost is the polluted river, which neither the seller nor the buyer have to pay for. Eco-taxes are a way to make someone pay for the cost of damaging the environment.

The concept is that green tax ensures that the true cost of the product is reflected in its selling price. For example, the market price of food will not only include its production but also the costs of pesticides damaging the environment, the loss of soil through erosion and the cost of air pollution from factories in making the end product.

This will make environmentally unfriendly products more expensive, so purchasers are persuaded to invest in alternative technologies, practices and resources that reduce environmental damage. Alternatively, people can be given a price reduction signal, for example the purchase of a car with low exhaust emissions means that the tax paid is reduced.

The aim of eco-tax is to use the funds to resolve the problems for which the tax was created, or be pumped back into the community through areas such as education. This use of revenue will also make the tax more "friendly” to those charged with it.

What you can do

Write a letter or email your local government authority and ask to improve your recycling program to lessen landfill costs.

When having a Greens collection, Ask your local government authority to process your greens and return them to you, to place on your own garden as water saving mulch, instead of sending it to landfill sites.

If you are considering the purchase of new appliances or equipment, compare the difference in energy use and not just the price. There may be a rebate or other incentive to purchase the more efficient model.

Write a letter or email the editor of your local newspaper and voice your support for green taxes.


Ecotaxation - History

Ecotaxation - Causes

Ecotaxation - Costs

Ecotaxation - Benefits

Ecotaxation - Solutions


Search our database for the contact details of organizations that directly address Ecotaxation

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