Impacts of Environmental Taxes on Sustainable Development Goals: Balancing Environment and Equity

Heng Kiat Sing, Nivakan Sritharan and Lisa Lee Hua Ngui

Journal of Tax Reform, 2025, vol. 11, issue 1, 175-199

Abstract: Environmental taxes, including carbon, environmental protection, energy, and greenhouse gas taxes, are widely recognized for their potential to promote sustainability. However, their specific impacts on achieving Sustainable Development Goals (SDGs) and addressing socio-economic equity remain underexplored. This study evaluates the effectiveness of environmental taxes in advancing SDGs, with a focus on fostering sustainable practices and exploring the reinvestment of tax revenues to enhance socio-economic equity. A systematic literature review was conducted, analysing 421 studies published from 2020 to 2024. The Open Sustainable Development Goals Community Platform was employed to map tax impacts across various SDGs, emphasizing the dual outcomes of environmental and socio-economic objectives. Findings indicate that carbon taxes effectively reduce emissions, contributing to SDGs 13 and 8, but often raise concerns about their regressive socio-economic impacts, challenging SDG 10. Environmental protection taxes drive innovation in sustainable industries yet may disproportionately affect lower-income populations. Energy taxes promote renewable energy adoption and green innovation, while greenhouse gas taxes incentivize emissions reductions but necessitate careful balancing of economic and environmental goals. The study underscores the need for designing equitable environmental tax policies that effectively balance sustainability goals with socio-economic equity. Policymakers are urged to reinvest tax revenues into social welfare programs, green initiatives, and renewable energy projects to foster public acceptance and equitable outcomes. Additionally, the importance of addressing disparities in tax impacts is emphasized. Future research should explore the long-term equity implications of environmental taxes to better inform comprehensive sustainable development frameworks.

Keywords: carbon tax; greenhouse tax; energy tax; environmental protection tax; Sustainable Development Goals (SDGs) (search for similar items in EconPapers)
JEL-codes: H24 H25 H26 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:aiy:jnljtr:v:11:y:2025:i:1:p:175-199

DOI: 10.15826/jtr.2025.11.1.197

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