Khrystenko Olha, PhD (Economics), Associate Professor, Head of the Department of Enterprise Economics, Mykolayiv National Agrarian University, Mykolayiv, Ukraine

ORCID ID: 0000-0003-0431-5328
e-mail: hristenko@mnau.edu.ua

Poltorak Anastasiia, Doctor of Economics, Professor, Head of the Department of Management and Marketing, Mykolayiv National Agrarian University, Mykolayiv, Ukraine

ORCID ID: 0000-0002-9752-9431
e-mail: poltorak@mnau.edu.ua

Burkovska Anna, PhD (Economics), Associate Professor of the Department of Management and Marketing, Mykolayiv National Agrarian University, Mykolayiv, Ukraine

ORCID ID: 0000-0003-0563-6967
e-mail: anna.burkovskaya12@gmail.com

Dovgal Ivan, Graduate Student, Mykolayiv National Agrarian University, Mykolayiv, Ukraine

ORCID ID: 0009-0008-0093-1362
e-mail: dovgalov@mnau.edu.ua

Environmental Taxation as a Basis of Stimulating Sustainable Development and Ensuring Financial and Economic Security

Abstract. Introduction. The modern challenges of sustainable development require the active implementation of mechanisms that promote the rational use of natural resources and reduce the negative environmental impact. Environmental taxation is becoming one of the tools that can replenish the state budget and stimulate environmentally responsible business behavior. In Ukraine’s context, especially in the aftermath of war-related destruction, an effective environmental tax system is of strategic importance. However, the current system does not fulfill its stimulating and compensatory functions, and businesses mainly perceive it as an additional financial burden.

Purpose. This study aims to strengthen the conceptual basis of environmental taxation as a means of promoting sustainable development in Ukraine. Particular attention is paid to analyzing the current state of the tax system and its legislative regulation. Recommendations for increasing the efficiency of environmental taxes are developed, taking into account international experience.

Results. An analysis of environmental tax distribution depending on the physical nature of the taxed object was conducted and five main categories were identified. The main problems of the existing system were recorded, including the taxes’ low stimulating and compensatory role, the inefficient distribution of revenues between budgets of different levels, and the weak control over compliance with environmental standards. Proposals for modernizing environmental taxation are presented, including reforming the CO₂ emission tax, adjusting the distribution of tax revenues, and introducing incentives for transitioning to a carbon-free economy.

Conclusions. Environmental taxation in Ukraine requires comprehensive modernization to fulfill its role as a tool for sustainable development. Improving the legislative framework, rationally distributing tax revenues, and introducing a system of incentives will foster environmental responsibility among businesses and encourage investments in environmentally friendly technologies. In the long term, these changes will lay the groundwork for transitioning to a sustainable economy, particularly in the context of post-war reconstruction, while ensuring the interests of all stakeholders are considered.

Keywords: environmental taxation, sustainable development, taxes, CO₂ emissions, Ukraine, economic policy, environmental technologies.

References:

1. Ahmad, M., Satrovic, E. (2023). How do fiscal policy, technological innovation, and economic openness expedite environmental sustainability? Gondwana Research, 124, 143–164. DOI: 10.1016/j.gr.2023.07.006.
2. Umar, F., Bilal, H. S., Muhammad, N. S. and Seemab, G. (2023).  Assessing the environmental impacts of environmental tax rate and corporate statutory tax rate: Empirical evidence from industry-intensive economies. Energy Reports, 9, 6241-6250. DOI: 10.1016/j.egyr.2023.05.254.
3. Yasmeen, R., Zhang, X., Tao, R., & Shah, W. U. H.  (2023). The impact of green technology, environmental tax and natural resources on energy efficiency and productivity: Perspective of OECD Rule of Law. Energy Reports, 9, 1308–1319. DOI: 10.1016/j.egyr.2022.12.067.
4. He, X., Jing, Q., & Chen, H. (2023). The impact of environmental tax laws on heavy-polluting enterprise ESG performance: A stakeholder behavior perspective. Journal of Environmental Management, 344, 118578. DOI: 10.1016/j.jenvman.2023.118578.
5. Yekimov, S., Prodius, O., Chelombitko, T., Poltorak, A., Sirenko, N., Dudnyk A., & Chernyak V. (2022). Reengineering of agricultural production based on digital technologies. IOP Conference Series: Earth and Environmental Science. Vol. 981(3), 032005. DOI: 10.1088/1755-1315/981/3/032005.
6. Hu, J., Chen, H., Dinis, F., & Xiang, G. (2023). Nexus among green finance, technological innovation, green fiscal policy and CO2 emissions: A conditional process analysis. Ecological Indicators,  154, 110706. DOI: 10.1016/j.ecolind.2023.110706.
7. Poltorak, A., & Volosyuk, Y. (2016). Tax risks estimation in the system of enterprises economic security. Economic Annals-ХХI, 158(3-4(2)), 35–38. DOI: 10.21003/ea.V158-08.
8. Jia, Z., Lin, B., & Liu, X. (2023). Rethinking the equity and efficiency of carbon tax: A novel perspective. Applied Energy, 346, 121347. DOI: 10.1016/j.apenergy.2023.121347.
9. Wei, X., Jiang, F., & Chen, Y. (2023). Who pays for environmental protection? The impact of green tax reform on labor share in China. Energy Economics, 125, 106862. DOI: 10.1016/j.eneco.2023.106862.
10. Xu, Y., Wen, S., & Tao, C.-Q. (2023). Impact of environmental tax on pollution control: A sustainable development perspective. Economic Analysis and Policy, 79, 89-106. DOI: 10.1016/j.eap.2023.06.006.
11. Wang, L., Ma, P., Song, Y., & Zhang, M. (2023). How does environmental tax affect enterprises’ total factor productivity? Evidence from the reform of environmental fee-to-tax in China. Journal of Cleaner Production, 413, 137441. DOI: 10.1016/j.jclepro.2023.137441.
12. State Statistics Service of Ukraine. (2024). 2023 Statistical information http://www.ukrstat.gov.ua/ 
13. Verkhovna Rada of Ukraine (2010). Tax Code of Ukraine.  Law No 2755-VIю https://zakon.rada.gov.ua/laws/card/2755-17.
14. Verkhovna Rada of Ukraine (2021). On making changes to the Tax Code of Ukraine and other legislative acts of Ukraine on ensuring the balance of budget revenues. Law No. 1914-IX. https://zakon.rada.gov.ua/laws/card/1914-20.
15. National Bank of Ukraine (2023) Macroeconomic indicators. https://bank.gov.ua/ua/statistic/macro-indicators#4.
16. Global Food Security Index. (2025). https://impact.economist.com/sustainability/project/food-security-index/
17. Wang, T., Umar, M., Li, M., & Shan, S. (2023). Green finance and clean taxes are the ways to curb carbon emissions: An OECD experience. Energy Economics, 124, 106842. DOI: 10.1016/j.eneco.2023.106842.
18. Oswald, Y., Millward-Hopkins, J., Steinberger, J. K., Owen, A., & Ivanova, D. (2023). Luxury-focused carbon taxation improves fairness of climate policy. One Earth, 6, 884-898. DOI: 10.1016/j.oneear.2023.05.027.
19. Ahmad, M., Alvarado, R., Yan, Q., Işık, C., & Jabeen, G. (2023). Is environmental sustainability transmissible? Transportation-based environmental taxation spillovers for sustainable development. Environmental Science and Pollution Research, 30(31), 77420-77435. DOI: 10.1007/s11356-023-27474-4.
20. Degirmenci, T., & Aydin, M. (2021).The effects of environmental taxes on environmental pollution and unemployment: A panel co‐integration analysis on the validity of double dividend hypothesis for selected African countries. International Journal of Finance & Economics, 28(3), 2231-2238. DOI: 10.1002/ijfe.2505.
21. EU (2014).  Association agreement between the European Union and its Member States, of the one part, and Ukraine, of the other part. http://publications.europa.eu/resource/cellar/4589a50c-e6e3-11e3-8cd4-01aa75ed71a1.0006.03/DOC_1.
22. EUR-Lex (2003). Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32003L0096.
23. Evrostat (2020). Environmental tax statistics. https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Environmental_tax_statistics#Environmental_taxes_in_the_EU.
24. Burkovska, A., Shebanina, O., Lunkina, T., and Burkovska, A. (2022). Socio-Psychological Determinants of Food Security in Ukraine: Causal Aspect. Economic Studies, 31(5), 145-162.