This article examines the arguments for and potential of environmental tax reform (ETR) from the standpoint of red-green politics. ETR has been criticised in relation to ethics, democracy and social justice. However, the ethical and democratic critiques can be countered through a critical examination of the potential of ETR as they take the fallacious neo-classical perspective as their reference point. In relation to social justice, the potential regressive consequences of some environmental taxes will, however, require mitigation and compensation. Despite the unsatisfactory nature of the recent reforms implemented in a number of European countries ETR has much to offer, both in terms of the effectiveness of environmental regulation and in reducing unemployment. In the longer term it could contribute to the creation of more favourable conditions for radical change.
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