Sustainable Development and the Role of Tax Policy

Abstract

The need for sustainable development is felt in all countries. An operational definition of sustainability is given to provide a framework to determine the extent to which the environment should be protected. The paper examines sources of environmental problems and then discusses various policy options to deal with them. Alternative policy instruments of both command and control policies and incentive-based policies such as taxes, subsidies, and tradeable permits are examined. The benefits, costs, efficiency, effectiveness, distributive implications, implementability, and appropriateness of alternative policy instruments for different types of problems are discussed.