This study contributes in existing literature by investigating the relation between carbon tax and CO2 emissions using the time series data for the period of 1974–2010. We have engaged structural break unit root test to test the integrating properties of the variables. The cointegration amid the variables is investi- gated by using the ARDL bounds testing. The direction of causal association among the variables is investigated by using the VECM Granger causality approach. We find that the relation between economic growth and CO2 emissions is inverted U-shaped but environmental taxes control CO2 emissions ineffectively. The feed- back effect is found between carbon tax and CO2 emissions.