The relationship between environmental taxes and growth: an analysis on turkey (1994 – 2014)

In this study, the relationship between environmental taxes and growth, which is an effective management mean in the prevention of environmental problems, has been investigated. When relationships between environmental taxes and growth are looked in different perspectives in the literature, it is seen that results can change. In this context, the relationship for Turkey was investigated with using with annual data between 1994-2014 period, performing with Johansen Cointegration test, Fully Modified OLS, Canonical Cointegration Regression (CCR) and Dynamic Ordinary Least Squares (DOLS) techniques. According to the results of the analysis, it was determined that there was a long-term relationship between the variables determined to be cointegrated. Due to the problem of endojenite, Johansen estimation result was interpreted only in terms of sign but could not be interpreted in terms of size. Therefore, using Fully Modified OLS, Canonical Cointegration Regression (CCR) and Dynamic Ordinary Least Squares (DOLS) techniques, the model was re-estimated and interpreted in terms of size. In this study when Turkey, European Union countries and OECD countries are compared in terms of areas of application of the environmental taxes, it was determined that the share of environmental tax revenues in the GDP in Turkey is higher than OECD countries and European Union countries although the scope of application is limited in our country. Also, according to FMOLS, CCR and DOLS forecast results gathered in the study, an increase of one percent in the growth rate increases the environmental tax revenues by 1.808182 %, 1.818228 % and 1.892339 % respectively. These results, which are very close to each other, show that this could be a situation that arose as a result of the higher environmental taxation in order to rule out environmental pollution that has been increasing with the increase in the economic growth in Turkey.