International Journal of Accounting Research

The Role of Taxes in Environmental Protection: Economic Tools and Policy Implications

Luca Galmarini^* Department of Banking and Finance, The University of Kyrenia, Kyrenia, Turkey
^*Correspondence: Luca Galmarini, Department of Banking and Finance, The University of Kyrenia, Kyrenia, Turkey, Email:

Received: 05-Jun-2023, Manuscript No. IJAR-23-22170; Editor assigned: 08-Jun-2023, Pre QC No. IJAR-23-22170 (PQ); Reviewed: 23-Jun-2023, QC No. IJAR-23-22170; Revised: 30-Jun-2023, Manuscript No. IJAR-23-22170 (R); Published: 07-Jul-2023, DOI: 10.35248/2472-114X.23.11.340

Description

In order to encourage sustainable practices and lessen environmental impact, taxes are an essential component of environmental preservation. Governments can internalize the external costs of pollution and resource depletion by levying taxes on activities that have a negative impact on the environment. Reduced emissions, improved resource efficiency, and the preservation of natural ecosystems are the results of these levies, which encourage firms and individuals to adopt cleaner technology and behaviors.

The use of financial instruments and increased interest in environmental rules, however, are likely to influence how business is conducted. Government environmental protection measures can occasionally cause large changes in economic and financial indices. On the other hand, taxes is a vital and wellliked financial tool used to regulate environmental quality. The balance of resources and the economy is also regulated. The carbon tax has also been on the minds of politicians as a taxing strategy, and it appears to be a workable solution to reduce carbon emissions.

To regulate the use of tobacco, many nations regularly enact legislative changes. Recent years have seen a rise in the importance of tobacco control strategies that complement taxing, such as those that prevent smoking, like information-campaign initiatives about problems linked to smoking. According to empirical data, tobacco control efforts, which also include taxation, include anti-smoking campaigns. While tobacco taxation theory has a lengthy history, there aren't many theoretical foundations for preventative programs. In order to better understand how taxation complements and interacts with other tobacco control strategies, this study major objective is to examine the role that non-price regulatory instruments play.

The first best would ideally be implemented through a series of person-specific levies, rendering other instruments unnecessary. Individual-specific taxes are however impractical in the real world due to a lack of knowledge and expensive administrative costs. As a consequence, policymakers often opt for uniform taxes, despite their less favorable outcomes. This necessitates the deployment of additional policy tools that target certain inefficiencies. Programs that focus on prevention are helpful in reducing these inefficiencies.

Due to their lack of self-control, smokers fail to internalize the population's average marginal health costs into their consumption choices, necessitating a tax rate equal to those costs in order to implement second-best efficient taxation. According on how differently smokers react to the tax-induced price increase, this benchmark rate must be changed. Nonetheless, as taxes primarily tackles the "internalities" of the average person, additional policy tools may be helpful to more accurately reflect the variability of consumer behavior. In instance, the use of antismoking efforts results in a wider range of reactions than those predicted by taxation for those who smoke for different reasons internally. The adoption of anti-smoking efforts is justified in and of itself by the capacity to more effectively account for the heterogeneity of agents, which implies benefits in social welfare.

Conclusion

In a context where smokers differ in terms of the strength of their smoking preferences, the health costs associated with tobacco use, and the degree of self-control, we examine the best design of policies limiting tobacco consumption through the joint use of two instruments-excise taxes and anti-smoking mass media campaigns. We discover that tobacco consumption can be effectively reduced when anti-smoking campaigns are used in conjunction with taxes. The implications of environmental taxes on Turkey's stock markets for renewable energy are examined in this study. Overall, taxes can play a significant role in environmental protection by internalizing external costs, providing economic incentives, generating revenue, driving behavioral change, and complementing regulatory efforts. They are a valuable tool in the policy toolkit for promoting sustainability and addressing environmental challenges.