ABSTRACT
Over the last few years, the idea of using economic, in particular fiscal, instruments for environmental protection has gained increasing support; indeed, a number of practical experiments have taken place in OECD countries. The tax-environment interface is becoming all the more important now that the need for structural adjustment in both industrialized and developing economies is high on economic and political agendas. A first OECD survey, which reflected the situation in 1987 in some OECD countries, identified 150 cases of economic instruments (EIs), out of which 80 were environmental charges/taxes. The proliferation of new environmental taxes and the restructuring of existing taxes raise the issue of the compatibility and coordination of these taxes with existing fiscal structures and policy. Agricultural support measures, such as price support and lower input prices, have potentially adverse environmental effects. In particular, environmentalists and tax experts must be in dialogue to make sure that both environmental and tax policies are compatible and, indeed, mutually reinforcing.
