Increasing the Role of Environmental Taxes and Charges as a Policy Instrument in Developing Countries: Some Conceptual Considerations

By Backhaus, Juergen G. | The American Journal of Economics and Sociology, November 2004 | Go to article overview

Increasing the Role of Environmental Taxes and Charges as a Policy Instrument in Developing Countries: Some Conceptual Considerations


Backhaus, Juergen G., The American Journal of Economics and Sociology


I

Introduction

THE JUDICIOUS USE (United Nations 1997) of natural resources is a crucial prerequisite for sustainable growth not just in developed countries but even more so in the third world. More generally, natural resource use is determined to a substantial degree by the tax structure governing a country's economic activity. When a tax constitution can be designed that stimulates the judicious use of natural resources, an important step toward achieving sustainable growth has been made. Designing such a constitution is not a simple task, however. For third-world countries, the task is further complicated by at least three factors. First, the tax system has to be exceedingly simple, since both number and quality of tax instruments available to third-world governments tend to be limited. Second, the legal system tends to mirror the state of economic development. This limits not only the tax structure an economy can bear; it also limits a government's ability to regulate natural resource use by legal means. Third, the more elaborate a legal system, the more diversity it affords its country for economic activity, including opportunities for the division of labor, that is, international competition and trade.

In trying to develop a perspective for the design of a tax constitution that allows sustainable growth in a third-world scenario, this essay tries to merge insights from three economic subdisciplines that tend to be taught separately: public finance, natural resource economics, and development economics. True to the general theme of this conference, the emphasis will be less on modern and more on classical authors, since these authors tended to emphasize the aspect of development in (public) finance.

The essay has nine sections in addition to this introduction and the conclusion. It starts with the discussion of the use of the environment and the natural resource endowment from the point of view of public finance theory. This point of departure is central, as it serves to identify the net product (le produit net) of economic activity after full consideration of the use of natural resources in the process of production. From this point of view, the question of what constitutes spillover effects or externalities in a market economy can be seen in the broad public finance perspective developed in Section II. Section III discusses some standard problems in designing a tax constitution for a third-world country. Section IV explores possibilities for creating a framework in which the sustainable use of the natural resource endowment can take place. Central to sustainable use is the notion that the environment has to be put to different uses, which raises the issue of the reversal of use, dealt with in Section V. The possibilities of ensuring reversibility of the use of natural resources is discussed in Section VI, and a specific procedure is developed that is designed to ensure that reversibility of use can be achieved with simple administrative means, in other words, means that are available to third-world governing authorities. Finally, Sections VIII and IX deal with the issue of institution building. Clearly, the effective use of environmental taxes and charges as a policy instrument requires the availability of the institutions in which such policies can be conducted. Hence, Section VIII gives an overview of basic institutions of the market economy. Section IX draws implications for an effective use of environmental charges and taxes. The essay ends with some concluding observations.

II

The Use of the Environment in Public Finance Theory: Establishing the Net Product

ONE OF THE CENTRAL ISSUES on which classical public finance theory has focused is the correct establishment of the net product of a national (or, for that matter, local) economy. The difference between gross and net social product is the expense necessary to maintain the source of a particular revenue. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Increasing the Role of Environmental Taxes and Charges as a Policy Instrument in Developing Countries: Some Conceptual Considerations
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.