Fiscal and environmental policies should be made mutually reinforcing. Green tax reforms imply not only the introduction of specific "ecotaxes", but also the removal or modification of a number of existing taxes and tax provisions having detrimental effects on the environment (e.g. lower taxation of polluting fuels). New ecotaxes can be compensated by the reduction of existing distortionary taxe such as income and labour taxes.
Most OECD countries have introduced various ecotaxes, but only a few are implementing comprehensive green tax reforms. This report reviews the state of the art and the lessons which can be drawn e.g. as to the competitiveness, social equity and employment implications of green taxes.