What are the advantages of a tax system for pollution control?

Answer 1

There are two main advantages of a tax system for pollution control. The first is an easier enforcement than a direct control system. Direct controls require a court system to enforce the standards through court order, injunctions, etc. Courts are often slow and burdened with other legal matters. Penalties may be too small to make much difference. By contrast, a tax system is as automatic for pollution control as it is for collecting other revenue. Therefore, it is very likely to generate revenue and lead to incentives to clean up to avoid payment.

The second advantage of a tax system is efficiency. Only polluters who can reduce emissions cheaply and efficiently can afford to take advantage of the "loophole"-the opportunity to avoid the tax by reducing emissions. The firms best able to clean up cheaply will know it and do so. The others will pay, but this will be cheaper overall than requiring them to clean up.