Definition from Wikipedia and used under the GNU Free Documentation License:

A Pigovian tax (also spelled Pigouvian tax) is a tax levied to correct the negative externalities of a market activity. For instance, a Pigovian tax may be levied on producers who pollute the environment to encourage them to reduce pollution, and to provide revenue which may be used to counteract the negative effects of the pollution. Certain types of Pigovian taxes are sometimes referred to as sin taxes, for example taxes on alcohol and cigarettes.

Pigovian taxes are named after economist Arthur Pigou (1877-1959) who also developed the concept of economic externalities.

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