Environmental taxes and subsidies: some insights from the Italian experience

  • Received January 30, 2020;
    Accepted March 30, 2020;
    Published May 13, 2020
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  • Article Info
    Volume 11 2020, Issue #1, pp. 39-53
  • Cited by
    3 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

Environmental taxes and subsidies are considered by the economic theory as useful policy instruments to enhance environmental protection, improve the alignment of prices with full social costs, and encourage sustainable modes of consumption and production. In a policy-oriented perspective, the issue of reforming the financial system in an environmental perspective has attracted increasing attention to the international and European agenda in recent decades. Despite these premises, the actual implementation of environmental fiscal reforms (EFRs) has often lagged behind their full potential and premises. This paper analyzes environmental taxes and subsidies applied in Italy in the last decades to identify priorities, opportunities, and barriers to future developments. Data collected in the main national data sources and reports, as the recently established Catalogue of Environmentally Harmful Subsidies (EHSs) and environmentally friendly subsidies (EFSs), reveal how the implementation and design of taxes and subsidies have been, and still are, mainly driven by non-environmental objectives, leading to mixed and not completely satisfactory effects. In conclusion, relying on these results, some key elements – transparency, graduality, and predictability – may help to overcome the existing barriers to implement and achieve a broader and comprehensive EFR in Italy.

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    • Figure 1. Environmental tax revenues (Italy, trend 1995–2017)
    • Figure 2. Excise duties on gasoline and diesel (EUR per liter, real prices in 2017)
    • Figure 3. Total cost of A3 component for supporting renewable sources, Italy (EUR billion, 2009–2018)
    • Figure 4. Labor tax/environmental tax (2000–2016)
    • Figure 5. Environmentally-harmful subsidies (EHS) by sector and typology (2017), EUR million
    • Table 1. Revenue breakdown of environmental taxes in Italy in 2017
    • Table 2. Estimates of total amount of subsidies by sector and typology (2017, EUR million)
    • Conceptualization
      Andrea Zatti
    • Data curation
      Andrea Zatti
    • Formal Analysis
      Andrea Zatti
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      Andrea Zatti
    • Investigation
      Andrea Zatti
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      Andrea Zatti
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      Andrea Zatti
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      Andrea Zatti
    • Writing – review & editing
      Andrea Zatti