Abstract

This research examines the instrumental roles of the introduction of environmental tax in the realisation of the polluter-pays principle under the federal jurisdiction of Ethiopia. It is a single country case-oriented comparative research design, and data triangulation is the method used to establish its validity. It first shows the recognition of polluter-pays as a principle, rule and policy to reach the idea of sustainable development. Secondly, it verifies the degradation/pollution-based redistributive, preventive and curative functions of the polluter-pays principle. Thirdly, it indicates the variations of the threshold-bound distributive and incentive bases of environmental tax according to the functions of the polluter-pays principle. Fourthly, it demonstrates the instrumental roles of: (1) Municipal and treated hazardous solid wastes, sludge, and sewer charges in covering the cost of their collection, transportation, treatment and disposal; (2) Effluent charges in restoring authorised water resources degradation; (3) Carbon tax and cap-and-trade in restoring authorised air degradation; (4) Consumption taxes in reinforcing an environmentally friendly pattern of consumption; (5) Royalties in encouraging rational use of scarce natural resources. Finally, it implies that the polluter-pays principle is contingent on setting up a range of legally viable and administratively feasible environmental taxes.