Environmental taxes have always played an important part in Latvia’s environmental policy as they help to internalize externalities, reduce damage, and increase quality of life, besides they allow to raise revenue for national and local governments. In this paper we looked at environmental (energy, transport and natural resource) taxes in Latvia to evaluate their environmental effectiveness, economic efficiency, equity impact, administrative feasibility and cost, and political acceptability. The research is based on the expert survey and desk. Results demonstrate little evidence that existing environmental taxes lead to the significant reduction in environmental pollution and waste flows, but they have significant fiscal effect. Most of the environmental taxes in Latvia applies direct and indirect subsidies but most of the revenue come from taxes on energy and transport. Environmental tax rates in Latvia are the result of political compromise and are not backed by the research on environmental costs of particular activity.