ENVIRONMENTAL TAXATION1.Introduction:Taxation can be used as a carrot or as a stick. To stimulate a right behaviour by decreasingtaxation on public transportation – carrot. By taxing petrol/diesel- deterring ppl from buying cars-Stick. To deter ppl from wrong behaviour- increase tax. This seems to be a popular way to usethe taxation- as a stick or as a carrot. So what are environmental taxes? Environmental tax isdefined as (Eurostat: in the OECD glossary of statistical terms) A tax whose tax base is aphysical unit (or a proxy of it) that has a proven specific negative impact on the environment. Anenvironmental tax is normally levied on certain activities which are considered to be harmful forthe environment and also to promote environmental friendly activities. This is a regulatoryapproach (command and control approach). Environmental taxes intend to increase the pricesof polluting elements and tend to lower the prices for environmental friendly products.Environmental taxes are also an example for pigovian tax- which tax the industries/personsresponsible for polluting. Taking into account the negative externalities in the pricing of theirproduce and in line with polluters pay principle