Implications of Environmental Taxation for Economic Growth and Government Expenditures in Visegrad Group countries

The paper shows an econometric approach to environmental taxes, economic growth and government expenditures in Visegrad Group (VG) countries from 1995 to 2018. The aim of this research is to explore how environmental taxes affect economic growth in Czechia, Hungary, Poland and Slovakia in the observed period. The subject of the research is to identify the relationship between total environmental tax revenues, energy tax revenues, transport tax revenues and economic growth. Also, empirical research includes the relation between environmental taxation and government expenditures to identify the character of their effects and influence on economic growth through government expenditures. The findings of VAR model I manifest that shocks in total environmental tax revenues and energy tax revenues positively and significantly affect the economic growth, whereas transport tax revenues have a negative and significant effect on economic growth. The results of VAR model II show that total environmental tax revenues are significantly positively related to government expenditures, which is not the case with energy tax revenues and transport tax revenues. Furthermore, empirical research finds a bidirectional causality between environmental taxes and economic growth, as well as unidirectional causality between environmental taxes and government expenditures in VG economies.