GREEN TAXES - CAN WE PROTECT THE ENVIRONMENT AND IMPROVE THE TAX-SYSTEM AT THE SAME TIME

With the growing recognition of the enormous revenue potential of certain environmental taxes public economists have returned to this question with a new round of research efforts directed both to understanding the properties of pollution taxes as revenue sources and to estimating their revenue potential and the magnitude of their effects on the economy. This paper reviews this work and explores its implications. When viewed in relation to some other research, it appears to suggest that most forms of regulatory activity may have hitherto unappreciated costs of a stunning magnitude. What many of us would have taken to be "second-order side effects' of environmental and other regulatory policies can be of a magnitude that compromises to a significant extent their welfare-enhancing properties. Having reviewed this body of work, it also explores some issues in the political economy of green taxes. -from Author