From indirect environmental taxes to carbon pricing: A theoretical lens on Viet Nam’s transition

PHAM THI NGOC DUNG

University of Finance-Marketing; Email: [email protected]

LE TRUNG DAO

University of Finance-Marketing; Email: [email protected]

TRAN TRUNG KIEN

University of Economics Ho Chi Minh City; Email: [email protected]

Abstract

Viet Nam is transitioning from indirect environmental taxation toward explicit carbon pricing under rising climate commitments. This paper develops a concise theoretical lens to reassess the effectiveness of the current environmental protection tax and to inform the design of a future carbon tax. Drawing on the Environmental Kuznets Curve, the green paradox, and the IPAT framework, it argues that the impact of environmental taxes on CO 2 emissions is conditional on economic structure, energy dependence, and technological capacity rather than mechanically linear. The analysis then turns to the behavioral dimension, emphasizing how policy design, perceived fairness, and institutional credibility shape firms’ willingness to comply with carbon pricing. By linking environmental tax effectiveness with compliance behavior, the paper offers a compact conceptual framework for Viet Nam’s transition. It highlights that successful carbon pricing depends not only on appropriate tax design but also on credible institutions and realistic firm responses.

Keywords: Environmental taxation, carbon pricing, CO2 emissions

(This article was published in the Vietnam Economic&Financial Review, Vol 2, Issue 3, June 2026)

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