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Sally JosephAustralian School of TaxationUniversity of New South Wales
•Different policy instruments
•Approaches to environmental taxation
•Driving corporate sustainability decisions
Different Policy Instruments
Economic Instruments – Market-Based
Economic Instruments – Financial
Command-Control Measures
Voluntary Measures
• Incentive-based• Economically efficient• Flexible• Market determined
• Lack of enforcement• Perception of ‘right to pollute’• Market manipulative
Economic Instruments – Market-Based
• Technological innovation• Developing lower carbon
economies• Reduce resource
use/consumption
• Political compromises• Distortion in business decisions• Increase in consumer prices
• Economically efficient• Flexible• Targeted and precise• Equitable application
• Discretionary• Impacts not costed• Earmarking – burden of proof
Economic Instruments – Financial
• Technological innovation• Developing lower carbon
economies• Reduce resource
use/consumption
• Political acceptance• Exemptions and exclusions• Increase in consumer prices
• Identified environmental issue targeted
• Deals with public goods and free rider issues
• Clarity and standardisation
• No incentives• Inflexible• Weak punitive measures• Inequitable application
Command-Control Measures
• Enforce environmental action• Application of polluter pays
principle• Reduce resource
use/consumption
• Technological innovation• Legislation implementation
timeline• Legislative loop-holes
• Commitment• Negotiated outcomes• Flexible
• No incentives• No punitive measures• Low economic efficiency• Apathy
Voluntary Measures
• Market image and perception• Increase market share• Employer of choice
• Government regulation• Questionable effectiveness• Resolve
Approaches to Environmental Taxation
Polluter Pays Principle
Technological Developments
Environmental Tax Reforms
Polluter Pays Principle
• Aim - fairness & justice
• Tenet – total marginal cost of production
• Objective – assign responsibility
• Application – market & non-market instruments
• Implications – practicalities, burdens, apportionments, costs & behaviours
Technological Developments
• New sources and methods
• Information and transaction costs
• Research and development
• End-of-pipe technologies
• Incremental improvements
• Modeling
Environmental Tax Reforms
• Revenue neutral
• Economically unsustainable
• Disproportional impacts
Source: United Kingdom; The Blue Book, 2008; 2010
Environmental Tax Reforms• Double dividend
• Employment effects
• Environmental effects
Source: Statistisches Bundesamt, Deustschland; 2009
Source: United Kingdom; The Blue Book, 2008; 2010
United Kingdom – CCL implemented 2001
Germany– ETR implemented 1999
Environmental Tax Reforms
Source: Eurostat Yearbook; 2010
• Double dividend
• Employment effects
• Environmental effects
Driving Corporate Decisions
Internal − Risk
External − Design
Risk
Inaction: low risk, low benefit
Proactive: high risk, high benefitBenefit
Risk
• Innovative technology
• End-of-pipe technology
• Commercial & government collaboration • Paradigm shift
• Political interference
• Command-Control measures
• Voluntary measures
• Global inequities
Design• Collaboration
• Features
• Implementation
Next steps
Climate change resilience demands measures that proactively increase productivity whilst reducing climate impacts.
Perpetuating current trade-offs perpetuates the perspective that there is always a loser in environmental taxation.
To challenge this, the structure and approach to environmental taxation must enter a new paradigm.
Sally Joseph
PhD with the Australian School of Taxation, University of New South Wales, Sydney, Australia
A sustainable corporate tax: is ecological wealth a viable alternative to financial wealth?
Developing a corporate tax model that delivers sustainable economic and environmental outcomes
Email: [email protected]@corporatereform.com
