How Far Are Developing Countries from the Call of Ecological Tax Reform? a Review of Environmental Fiscal Policy for Kenya

The main objective of this paper is to determine whether ecological tax reform paradigm that hitherto is employed by a section of industrialized countries as an instrument of environmental management has possibilities of application in developing countries. This is an imperative consideration because of possibilities of diffusion, the need to approach global environmental issues from a global policy framework and, the tendency to global environmental policy convergence. This paper begins by reviewing the conceptual strengths and weaknesses of environmental tax in general and ecological tax reform in particular. Environmental taxes are particularly difficult to apply due to their potential political ramifications. The theory of double dividend that sprung up as a solution to this has also run into problems in the process of application as ecological tax reform. For empirical analysis, the paper relies on a case study of the environmental management policy in Kenya that reveals a strong evidence of global environmental policy convergence. Another great revelation is that environmental taxes that are the genesis of ecological tax reform already exist in the form of official policy instruments and are in actual application. But this does not mean ecological tax reform has freeway into the Kenyan policy environment. There are far too many hurdles like over-reliance on standards and enforcement, north-south politics, industrialization myth and, the double dividend flaw. The conclusion is that ecological tax reform is possible and perhaps desirable for a developing country situation but with requisite contextualisation.