The tax is imposed on fossil fuel consumption which is the major source of conventional air pollution and greenhouse gases in Maryland. This is simpler than monitoring and taxing pollution at the tailpipe and chimney stack. This kind of tax is also known as a carbon tax because the tax rate is set according to the carbon content of each fuel. Coal has the highest carbon content and natural gas the lowest, with petroleum products in between. Therefore, the tax is proportional to the emissions of carbon dioxide associated with burning each fuel.
Carbon dioxide is the most important greenhouse gas released by human activities.
But the tax also broadly correlates with emissions of pollutants regulated by the federal Clean Air Act. These pollutants are responsible for smog, acid rain and other air quality problems. In other words the more polluting the fuel the higher the tax. There seems to be an emerging consensus that both spending cuts and new taxes are needed to resolve the current budget crisis. Unlike other taxes, an air pollution tax provides environmental benefits while raising revenues.