Environmental Taxation and Economic Growth: An Analysis on Panel Data ARDL Model, Applied to BRICS Countries

This study investigates the relationship between environmental taxation, economic growth, and CO2 emissions in BRICS countries (Brazil, Russia, India, China, and South Africa) from 1990 to 2021 using the Autoregressive Distributed Lag (ARDL) model. The findings reveal a significant long-term cointegrating relationship among the variables, indicating that economic growth is positively correlated with CO2 emissions, consistent with the Environmental Kuznets Curve (EKC) hypothesis. Specifically, while initial economic growth leads to increased emissions, a turning point is identified beyond which further growth may contribute to emissions reduction. The analysis also highlights the effectiveness of environmental taxation in mitigating CO2 emissions, suggesting that higher tax rates are associated with lower emissions. This underscores the importance of implementing robust fiscal policies to promote sustainable development. The study concludes with policy recommendations aimed at enhancing environmental sustainability while fostering economic growth in BRICS nations, emphasizing the need for a balanced approach that integrates economic and environmental objectives.