One environmental taxes; those related to the environment
the problems that currently affect the economy and the world, in general, is
the depletion of natural resources and environmental pollution, whose
consequences are reflected in natural disasters and less disposition of
necessary resources for the human being. Carbon dioxide (CO2) is known as the
main factor for the intensification of greenhouse gases (GHG) as well as
climate change (Alcantara & Padilla, 2005). Therefore, the need arises to
establish a regulatory system for the control of GHG; it is recognized that
countries of the European Union have been pioneers in the application of
environmental taxes. For Mexico, research and implementation have been
practically scarce (Arredondo et al., 2011).
best policies for reducing climate change is the allocation of a price to
carbon, to take responsibility for the social costs of our actions and adopting
measures against climate change. The benefits will outweigh the costs since not
act will have a great impact on the world economy (Stern, 2006). These types of
taxes contribute to social and political support, change behavior patterns,
minimize the regressive impact, contribute to promoting economic efficiency,
reduce externalities and take care of the environment (Heady, 2007).
recognized as the Organisation for Economic Co-operation and Development (OECD)
member country with the lowest environmental taxes; those related to the
environment are the Special Tax on Production and Services (STPS), Car Sales
Tax (CST) and Fossil Fuels (Arlinghaus, J & K. Van Dender, 2017). The
emissions generated by transport have a great impact, since they represent 22%
of global emissions, and 75% of these are produced by domestic transport (IEA,
2012). In addition, Mexico is a country with the highest CO2 emissions in Latin
America according to World Bank data (2017).
Therefore, the purpose of this research paper is to address the
question, to what extent the implementation of green taxes in Mexico can help
in a certain way to reduce negative environmental externalities. My idea of
this is that green taxes are considered as incentives to polluters to reduce
pollution and find out sustainable alternatives. In
the first part of this essay, the theoretical bases of environmental taxes will
be explained. In the second
section, green taxes that currently exist in the world and especially Mexico and
studies related to environmental taxation will be shown. In the third section, a
hypothesis based on the research question will be demonstrated.
principal objectives of environmental taxes are to implement responsible ecological
behavior and assume the cost of polluting the environment (Mirrless et al.,
2011). This will motivate people to have a culture of recycling, care for the
environment, and companies are encouraged to search for new technological
alternatives that help implement more efficient production processes that do
not pollute the environment (Ambec et al., 2013).
The main principles of taxation are
progressivity, simplicity, neutrality, and stability which are desirable in a
tax system. Applying these principles to green taxes may allow countries to
reach the principal objectives of environmental taxes in the most efficient and
effective way. (Mirrless et al., 2011). Progressivity indicates that tax burden
is distributed according to the economic and contributory capacity of citizens.
A simple tax system promotes transparency, in other words, this means that
obligations, rules, and liabilities are clear and understandable and reduces
fraud because it is easier to understand and can be avoided with more difficulty.
Neutrality assumes that tax burden should be distributed equally among people
with the equal economic capacity and minimizes negative effects of taxation. The
stability of a tax system concerns to the stability of income made from taxes
and the stability of tax rules; which are important for investment decisions.
interesting approach to a model regarding environmental tax was developed by Marshall
(1890) gave the concept of externality, from the beginning this term referred
to economies of scale (external and internal), later some of those who
developed the concept were Pigou (1920), Kapp (1950), Scitovsky (1954), Bator
(1958) and Coase (1960), and so forth, becoming a concept to analyze the
presence of environmental problems as well as their possible solutions
(Labandeira et al., 2007). The meaning of externalities lies in the
deterioration or misuse of natural resources (Vázquez V., 2014).
classical political economy, Pigou (1920), developed a tax in order to
internalize the externalities in the price system, compensating the damage to
third parties by equating the marginal social cost to the level of optimal
pollution, without hinting at a zero level, but when the marginal profit is
equal than the marginal social cost, is named “Pigouvian Tax” (Alier
et al., 1998). It is said that Pigou gave the theoretical basis for the
implementation of environmental taxes under the principle “polluter
pays”; this means that the polluter will pay for all costs related to
activities that produce impacts and harm to the environment or social welfare
(Acquatella et al., 2005). This principle has been shown to be useful in
restricting pollution and the creation of laws (Potier, 1992).