Double dividend taxes
In some cases where the economy is not perfectly competitive, the existence of a tax can increase economic efficiency. If there is anegative externality associated with a good, meaning that it has negative effects not felt by the consumer, then the free market will trade too much of that good. By putting a tax on the good, the government can increase overall welfare as well as raising revenue in taxation. This is known as a 'double dividend'.
There are a wide range of goods where there is, or is claimed to be, a negative externality. Polluting fuels (like petrol), goods which incur public healthcare costs (such as alcohol or tobacco), and charges for existing 'free' public goods (like congestion charging) all offer the possibility of a double dividend. This type of tax is a Pigovian tax, sometimes colloquially known as a 'sin tax'. It is worthwhile noting that taxation is not necessarily the only, or the best, method of dealing with negative externalities.