This paper concerns income taxation and commodity taxation in a multi-jurisdiction framework with transboundary environmental damage. The decision-problem facing the government in each such jurisdiction is represented by a two-type model (with asymmetric information between the government and the private sector). We show how the possibility to influence the world-market producer price adds mechanisms of relevance for redistribution and externality-correction which, in turn, affect the domestic use of taxation. Finally, with the noncooperative Nash equilibrium as a reference case, we consider the welfare effects of policy coordination.