Policy Paper 18 | Environmental Taxes in Portugal: current framework and options for the future

Environmental taxation is crucial to tackling the effects of climate change and global warming. Economic activities and consumption are responsible for the majority of climate change effects.

By increasing prices of environmentally harmful activities and products, green taxation has as its primary objective changing human behavior towards greener practices. However, if not accompanied by compensatory measures, environmental taxes may be distortionary and even become regressive.

This policy paper intends to provide an overview of Portuguese environment taxes, as well as to present recommendations to policymakers.