Taxation on Environmental Services as an Incentive for environmentally Desirable Practices

an Analysis of the Exemption Provided in Article 17 of Brazilian Law no. 14,119/2021

Abstract

In 2021, Law No. 14,119 was published, establishing the National Policy on Payment for Environmental Services. In its article 17, the legislation introduced an exemption from federal taxes concerning the provision of such services. However, even before the law was totally approved, the Brazilian President cancelled the tax incentive, mainly due to the need to respect the revenue-raising purpose of taxation. Nevertheless, taxes also serve as important mechanisms to incentivize behaviors desired by the government, playing a crucial role in fiscal policies and the enforcement of constitutional guarantees. It is for this reason that this study aims to discuss the importance of tax incentives in environmental policies and determine whether tax exemption is feasible and specifically desired in relation to the provision of environmental services.