The use of tax policy to link environmental and revenue goals is not so new, nor very unusual, as demonstrated by this brief yet thorough regional survey, prepared by Vermont Law School-Environmental Law Center visiting professor Janet E. Milne with research assistant Susan Hasson. The inventory shows that the use of taxation for environmental purposes is fairly common in the Northeast yet diverse in applications and details. Incidentally, Connecticut also has the highest standard of living in the region.
Environmental taxes can promote economic efficiency and contribute to environmental quality.
First, they can improve tax efficiency by imposing marginal costs on socially harmful, rather than beneficial activity. And finally, revenues can be dedicated to environmental uses such as ecological restoration projects, freeing-up scarce general funds. Today with tax and regulatory reforms high on the legislative agenda of many states, a window of oppportunity is open for expanded use of environmental taxation. However, separate mechanisms to offset social impacts of new or modified tax policies are often necessary for political viability. This valuable and timely guide to what neighboring states have done should be on the desk of every legislator and environmental policy advocate.