Environmental Tax Convergence and Interdependence in the European Union

Abstract

This paper empirically analyzes the convergence and interdependence of environmental taxes in Europe from 1998 to 2018. Our results evidence a lack of European integration and reveal a group of converging countries characterized by a lowering tax burden. Moreover, a subsequent spatial regression analysis supports that the converging countries exhibit a significantly greater sensibility to the neighboring environmental tax policies, compatible with some degree of cross-country tax competition.