Excise duties on energy products, taxes on vehicles, noise, pollution and natural resources: environmental taxes paid by Italian residents ensured revenues totalling 53.1 billion Euros in 2013. Is it possible to quantify the environmental costs borne by the community, namely, the damage to the environment and health caused by pollution sources related to household and enterprise activities, and compare them with the environmental taxes paid by the same activities?

A preliminary calculation of health and environmental damages caused by pollution due to economic activities - limited, for the time being, to emissions into the atmosphere and transport noise pollution - in 2013 showed households at the top of the list, with 16.6 billion, followed by the industrial sector (13.9 billion) and agriculture (10.9). Yet there is a remarkable imbalance between the damages due to actors who pollute (externalities) and the environmental taxes paid by the same actors: in 2013, households paid 70% more than the damage caused, while enterprises paid 26% less. The greatest discount was granted to agriculture (93%). Is there room for a reform of environmental taxation, so as to ensure greater fairness and transparency? This paper sets forth a new approach for a better implementation of the 'Polluter pays' principle, taking into account not only environmental taxation, but also subsidies that are harmful to the environment.