The role of Italian tax law in environmental sustainability

Environmental sustainability is a crucial issue for tax law, as taxation can influence behaviors and decisions that affect the environment. The ecological transition of economic activities and taxpayers' behavior gives taxation a fundamental role in incentivizing sustainable practices and reducing the environmental impact of economic activities. In this context, the circular economy plays a key role, in turn contributing to a country's environmental and economic sustainability. Circular economy-oriented taxation is a fundamental pillar for achieving sustainable development goals and addressing environmental and climate challenges. In Italy, following the 2022 constitutional reform, the environment and its protection have acquired constitutional value, which must be safeguarded. Based on these considerations, this article aims to clarify the role of tax law in the Italian legal system. Below, we will illustrate the various incentives and measures provided by Italian law to support and protect the environment, encouraging economic operators to move towards a circular, rather than linear, economy. In the circular economy, waste becomes a raw material to be incorporated into the new production process. The real challenge is environmental sustainability and the protection of the rights (both environmental and cultural) of future generations. Tax scholars, and legislators in particular, must abandon the "isolation of tax law," precisely because time and economics require the legal system to be "contextualized" within a "legal-social" perspective and connected to one of the main "legal-social" debates of the moment: that of "climate change." The financial needs resulting from the ecological transition, especially for businesses, are difficult to sustain under current tax regulations. Furthermore, the transition is never "cost-free": costs are inevitable and difficult to manage without the ongoing evolution of tax laws. The question is whether the Italian legislator has provided environmental protection rules that can encourage economic operators to adopt ecological transitions.