Eco-Fiscal Tools and Municipal Finance: Current Practices and Opportunities

Jean-Philippe Meloche and Fanny Tremblay-Racicot
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Fanny Tremblay-Racicot: University of Toronto

No 71, IMFG Papers from University of Toronto, Institute on Municipal Finance and Governance

Abstract: Eco-fiscal tools are tax measures that target behaviour or the consumption of goods or services that contribute to environmental degradation. These taxes, fees, or charges correct market price signals to help internalize the social and environmental costs of individual choices, while providing financial resources to supply public goods and services. In Canada, an important part of the eco-fiscal debate focuses on carbon emissions (such as the carbon market and carbon taxes). Although central governments are backtracking on efforts to limit environmental degradation, municipalities are playing an increasingly important role in the eco-fiscal field. The tools they are using do not raise significant revenues, but they are helping to change behaviours. This paper explains the main arguments for the use of eco-fiscal tools and reviews the literature on their impact. It explores the range of eco-fiscal tools implemented by Canadian municipalities and proposes innovative tools that could be implemented in the future.

Keywords: Eco-fiscal tools; environmental taxes; local public finance; municipalities; Canada (search for similar items in EconPapers)
JEL-codes: H23 H71 R51 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2025-09
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