What are green taxes?

The extent of environmental pollution and the use of natural resources can be influenced through legal or fiscal regulatory instruments. In this regard, without government intervention the balance of social costs and benefits cannot be achieved or maintained.

A legal instrument may take the form of a statutory ban or restriction on the use of a particular resource or on a polluting activity. Fiscal regulators fall broadly into two groups. The first comprises monetary policy instruments (for example, green bonds), while the second includes green taxes, tariffs, charges, and various tax‑like incentives (tax allowances, financial subsidies).

Green taxes—also known as environmental taxes or eco‑taxes—are fiscal regulatory tools introduced to support environmental objectives and address environmental problems. They are typically levied in connection with certain activities, products, or services that entail negative environmental impacts.

What is the primary objective of these measures?

The general aim of green taxes is to increase the price of environmental resources and thereby reduce the extent of environmental damage. Properly designed and implemented green taxes can help mitigate environmental harm, support alternative energy sources and technologies, raise environmental awareness, and finance environmental projects. It is, however, essential to consider balance and potential social impacts when introducing such taxes.

The role of green taxes

These measures can, over the long term, contribute to building a more sustainable and environmentally conscious society and play an important role in promoting sustainable development. The key aspects are highlighted below:

• Reducing environmental damage: By imposing green taxes, economic actors that cause environmental harm are made to bear the environmental costs themselves. This incentivizes them to reduce the extent of their environmentally harmful activities.
• Supporting alternative energy sources and technologies: Environmental taxes increase production and consumption costs associated with fossil fuels, which enhances the competitiveness of alternative energy sources and environmentally friendly technologies.
• Raising revenues: The revenues generated can help finance environmental projects such as the development of alternative energy sources, waste management, or the protection of natural areas.
• Increasing awareness: The introduction of green taxes and support for eco‑friendly alternatives boost public awareness of environmental issues, which can lead to long‑term positive changes in consumer behavior and corporate practices.

Andersen’s related services

Andersen’s tax professionals offer the following products and services in relation to environmental taxes:

CBAM advisory

Services related to the carbon border adjustment mechanism devised to counteract circumvention of EU emissions trading rules (carbon leakage), including reviews of importers’ product flows, identification of incorrectly classified products, and audits of compliance systems.

EPR advisory

Services related to the extended producer responsibility (EPR) regime, including scoping assessments, assistance throughout the registration process, determination of KF codes, and preparation and submission of quarterly reports.

EUDR advisory

Services concerning the application of the regulation governing the placing on the EU market, or export from the EU, of certain commodities and products linked to deforestation or forest degradation.

Environmental product fee optimization

Identifying products subject to the environmental product fee, designing systems of obligation transfers and refunds to optimize processes, reviewing product‑fee records and reports, and taking over tasks related to the filing of returns.