Some environmental economists believe that taxing environmentally damaging practices is a surefire way to encourage companies to rethink those activities.When a company is faced with such a tax,it may find that the long-term benefits of shifting to more sustainable practices far outweigh the initial cost of such changes.An eco-tax or green tax approach means that instead of taxing labor and profits,authorities tax the specific activities that result in pollution and environmental damage one example is quantifying the amount of air pollution emitted from the manufacture of a product and placing a tax on those emissions.The company either pays that tax or passes the fee on to the consumer,which means the product will cost more.