trengths
pportunities
Sally Joseph
Australian School of Taxation
University of New South Wales
eaknesses
hreats
trengths
eaknesses
• Different policy instruments
•pportunities
Approaches to
environmental taxation
• Driving corporate
sustainability decisions
hreats
Different Policy Instruments
trengths
eaknesses
Economic Instruments – Market-Based
Economic Instruments – Financial
pportunities
hreats
Command-Control Measures
Voluntary Measures
Economic Instruments – Market-Based
trengths
•
•
•
•
Incentive-based
Economically efficient
Flexible
Market determined
pportunities
• Technological innovation
• Developing lower carbon
economies
• Reduce resource
use/consumption
eaknesses
• Lack of enforcement
• Perception of ‘right to pollute’
• Market manipulative
hreats
• Political compromises
• Distortion in business decisions
• Increase in consumer prices
Economic Instruments – Financial
trengths
•
•
•
•
Economically efficient
Flexible
Targeted and precise
Equitable application
pportunities
• Technological innovation
• Developing lower carbon
economies
• Reduce resource
use/consumption
eaknesses
• Discretionary
• Impacts not costed
• Earmarking – burden of proof
hreats
• Political acceptance
• Exemptions and exclusions
• Increase in consumer prices
Command-Control Measures
trengths
• Identified environmental issue
targeted
• Deals with public goods and free
rider issues
• Clarity and standardisation
pportunities
• Enforce environmental action
• Application of polluter pays
principle
• Reduce resource
use/consumption
eaknesses
•
•
•
•
No incentives
Inflexible
Weak punitive measures
Inequitable application
hreats
• Technological innovation
• Legislation implementation
timeline
• Legislative loop-holes
Voluntary Measures
trengths
• Commitment
• Negotiated outcomes
• Flexible
pportunities
• Market image and perception
• Increase market share
• Employer of choice
eaknesses
•
•
•
•
No incentives
No punitive measures
Low economic efficiency
Apathy
hreats
• Government regulation
• Questionable effectiveness
• Resolve
Approaches to Environmental Taxation
trengths
eaknesses
Polluter Pays Principle
Technological Developments
pportunities
hreats
Environmental Tax Reforms
Polluter Pays Principle
trengths
eaknesses
• Aim - fairness & justice
• Tenet – total marginal cost of
production
• Objective – assign responsibility
pportunities
• Application – market & non-market
instruments
• Implications – practicalities, burdens,
apportionments, costs & behaviours
hreats
Technological Developments
trengths
eaknesses
• New sources and methods
• Information and transaction costs
• Incremental improvements
pportunities
• Modeling
• Research and development
• End-of-pipe technologies
hreats
Environmental Tax Reforms
Employers
Employees
trengths
eaknesses
120,000
100,000
80,000
60,000
40,000
1999
2000
2001
2002
•pportunities
Revenue neutral
2003
2004
2005
2006
2007
2008
2009
hreats
• Economically unsustainable
• Disproportional impacts
Source: United Kingdom; The Blue Book, 2008; 2010
Environmental Tax Reforms
United Kingdom – CCL implemented 2001
trengths
• Double dividend
eaknesses
• Employment effects
• Environmental effects
Germany– ETR implemented 1999
pportunities
hreats
Source: United Kingdom; The Blue Book, 2008; 2010
Source: Statistisches Bundesamt, Deustschland; 2009
Environmental Tax Reforms
• Double dividend
Greenhouse Gas Emissions (MT CO2)
trengths
85
eaknesses
• Employment effects
75
1997
65
2002
2007
• Environmental effects
55
45
Denmark
Finland
pportunities
Sweden
Norway
Source: Eurostat Yearbook; 2010
hreats
Driving Corporate Decisions
trengths
eaknesses
Internal − Risk
External − Design
pportunities
hreats
Risk
Benefit
trengths
• Commercial & government
collaboration
• Voluntary measures
Proactive: high risk, high benefit
eaknesses
• Paradigm shift
• Innovative technology
Risk
pportunities
• Global inequities
• Political interference
Inaction: low risk, low benefit
• Command-Control measures
hreats
• End-of-pipe technology
Design
•trengths
Collaboration
Business
eaknesses
• Features
Environment
• Implementation
pportunities
Government
hreats
Next steps
trengths
eaknesses
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
pportunities
hreats
environmental taxation.
To challenge this, the structure and approach to
environmental taxation must enter a new paradigm.
Sally Joseph
trengths
eaknesses
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
pportunities
hreats
environmental outcomes
Email: sally-ann.joseph@student.unsw.edu.au
sally@corporatereform.com