Environmental taxation and its determinants in Europe. Is there any relationship with rule of law, ICT and imports?

The paper analyses the determinants of environmental taxation in European countries, which is one of the most widespread but controversial environmental policy instruments in Europe. Besides investigating the most expected factors responsible for tax collection, such as those related to production and consumption activity and environmental quality, particular attention is paid to some non-trivial determinants. Firstly, we analyse the importance of institutional context that is argued to be crucial for the enforcement of environmental policies. Secondly, the consumption of rapidly obsolescent goods, such as ICT goods characterised by substitution phenomena, and consequently by intensive waste generation, is taken into account. Finally, we consider that a large part of European countries transfer their production process abroad which increases the importation of goods. This process leads to the decrease of local emissions release and, consequently, influences environmental taxation. The results demonstrate that the above determinants have a heterogeneous impact in developed and former-transition European economies. In developed countries, the rule of law stringency and the importation of ICT goods have a positive impact on environmental taxation while the importation of other goods has a negative effect. As expected, these results are not valid for former-transition economies, which can be due to a still weak institutional context and different patterns of their economic development.