Green taxation is politically essential not just politically correct

 

ACCA paper advises on green tax policies -

Using environmental and green taxation to boost falling tax revenues needs careful planning by government and policy makers says ACCA (the Association of Chartered Certified Accountants) today as it publishes a position paper called Green taxation in a recession.

ACCA warns governments that carbon taxes will not be the panacea national governments are probably expecting.

Chas Roy-Chowdhury, global head of taxation at ACCA, says:

“We’re not advocating tax hypothecation – where a tax is explicitly raised to fund the development of a specific service. Green taxes need to be transparent and unambiguous so the public and business understand what benefits are going to result for the potential pain caused.”

“Public trust in green tax systems is vital; government and policy experts need to strike a balance between the need to raise revenues and the environmental objective underpinning the policy. The trouble is, they’ll hurt.”

Green taxation in a recession offers five clear recommendations:

1. Ensure green taxes are global, with global co-ordination of policies and ideas.

2. Design and implement green taxation policies carefully – and then measure and analyse the results.

3. Consult widely with electorate / business before introducing taxes so they understand what is happening and why.

4. Raise awareness of the need for this type of taxation - explain the benefits.

5. Make green taxes explicit and transparent, so they are understandable.

ACCA also asserts that global synchronisation in green taxation policy is a necessity. Chas Roy-Chowdhury says: “If environmental taxation lacks international co-ordination, it will not impact global pollution levels, as companies will simply relocate and move the pollution problem with them. If measures are implemented unevenly, in one country and not another, it leads to a loss of international competitiveness. Scrutiny of business’s environmental performance will only increase as we move to a low carbon economy. But business needs policies that are transparent, clear, credible and certain in order to achieve carbon reduction goals.”

Chas Roy-Chowdhury says: “Governments must use tax policy as an instrument of positive change - and that's the challenge for the future.”

Green taxation in a recession can be found at this link:

http://www.accaglobal.com/pubs/about/public_affairs/unit/global_briefings/green_tax.pdf

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Green tax around the world

- Sweden has taxes aimed at reducing energy consumption and additionally provides subsidies or exemptions for energy derived from sustainable or renewable sources.

- In 1990, Finland became the first country to introduce a carbon tax.

- The US has implemented tax measures to increase investment in renewable energy sources enacting tax credits for the expansion of wind, solar, biomass and other renewable energy technologies.

- China taxes the disposal of household and commercial waste and has a further tax on the disposal of waste water, while companies that reduce their water consumption are offered corporate income tax allowances.

- Germany has implemented taxation on emissions on transport, which are calculated directly on the level of emissions.

- Australia introduced a small levy on fertiliser as early as 1986. Although this does not raise significant amounts in tax revenues, it has had an impact on the type and amount of fertiliser used.

- In Denmark 5.9 percent of tax revenues are made up of environmental taxes, according to Eurostat, by far the highest proportion in the EU and arguably the highest in the world. 

- The UK has implemented a range of environmental taxes, including the Climate Change Levy, a tax on the end-use of ‘taxable commodities’ (principally electricity, gas and coal) by commercial customers, and the Landfill Tax, which taxes people and organisations when they discard waste in landfill sites.

Courtesy By ACCA