Abstract
This article provides a comprehensive analysis of environmental taxes as an essential fiscal instrument for promoting the transition toward a green economy. In the context of increasing environmental challenges, including climate change, air pollution, and natural resource depletion, the role of economic policy tools in ensuring sustainable development has become significantly more important. Environmental taxes are designed to internalize negative externalities by incorporating environmental costs into market prices, thereby influencing the behavior of both producers and consumers. The study also combines theoretical approaches derived from classical and modern economic thought with empirical observations based on cross-country data. In particular, the paper examines the relationship between environmental tax revenues and environmental quality indicators, such as air pollution levels. The findings suggest that countries with relatively higher environmental tax revenues tend to demonstrate lower levels of pollution, although this relationship is influenced by additional factors, including institutional quality, energy structure, and technological development. Furthermore, the article evaluates the role of environmental taxation in stimulating green innovation and investment. It is argued that environmental taxes not only discourage environmentally harmful activities but also create economic incentives for the adoption of cleaner technologies and renewable energy sources. As a result, they contribute to structural transformation within the economy and support the development of new, environmentally sustainable industries. Special attention is given to the challenges associated with implementing environmental taxes in developing economies. These include potential regressive effects on household income, limited administrative capacity, and the need for public acceptance.