Environmental pollution and the potential of providing double dividend of environmental taxes

Relating to industrialization and technological development, the rapid increase of environmental pollution has led to damage on air, water and soil. As a negative externality, internalization of environmental pollution through environmental taxes is great importance to environmental protection and social benefits. Especially in carbon taxes on the reducing global warming potential, the interest of environmental taxes at the global level is getting increasing by the day. Growing interest towards the environmental taxes has provided to examine the secondary potential benefits that is the result (creation) of environmental taxes. In this context, with enviromental taxes both increasing environmental quality and reducing the the diversion of tax revenues and distortionary taxes is discussed within the frame work of the double dividend hypothesis.The double dividend hypothesis offers welfare and provision of employment growth concerned with the reduction of the distortionary taxes within the tax system by means of the income from environmental taxes. The theoretical works on the hypothesis explain emerging the double dividend regarding that environmental quality, increase prosperity and employment growth under certain assumptions could be ensured together. However, The conditions which provide this efficiency increases would cause the negative side effects on tax equity and income distrubition.