Environmental versus fiscal considerations in taxing energy

Abstract

There are good reasons to be cautious about integration optimism with respect to energy taxation, i.e. that environmental and fiscal considerations can support each other. Energy taxes are vulnerable to criticism from an environmental point of view, among other things, energy tax legislation has been amended repeatedly and many tax components are narrow–based, leading to environmental ineffectiveness as well as to cost–ineffectiveness. From a fiscal point of view, one might speak about a double–dividend illusion instead of the double–dividend gain.