Environmental taxes: economic principles and the UK experience

This is the English translation of the chapter Tributación medioambiental: principios económicos y experiencia en el Reino Unido published in Pelegry, E. and M. Larrea Basterra (eds.) (2013), Energía y Tributación Ambiental, Orkestra, Basque Institute for Competitiveness. It explores the economic principles surrounding environmental tax policy, and considers three examples where UK green taxes fall down against those principles. First, implicit tax rates on carbon vary substantially across different carbon emitted in different forms, which is economically inefficient. Second, tax rates on landfill appear much higher than can be justified by the environmental harm generated, and appear instead to be driven by external targets to reduce landfill rates. Third, taxes on road use are poorly targeted on the external costs associated with motoring.