6. Green taxes and green public spending

Transcription

1 6. Green taxes and green public spending UN ESCAP Meeting of Expert Group on Tax Policy and Public Expenditure Management for Sustainable Development Bangkok, via skype from Bonn/Germany Kai Schlegelmilch President and Co-Founder GREEN BUDGET GERMANY (GBG) Vice-Chair of Adisory Committee and Co-Founder GREEN BUDGET EUROPE (GBE) 1

2 Environmental Taxes in the EU Energy (fossil and nuclear fuels, electricity) Emissions (like CO 2 or SO 2 ) Transport (fuels, annual tax, registration/ importation/ emissions of cars, size of motor) Waste Wastewater Natural resources (material, minerals) Environmental harmful products (pesticides, fertilizer, plastic bags, tyres, batteries, etc.)

3 Common features of EFRs Energy (and carbon) taxes, and here transport fuels, are the core elements, not at least since they contribute to most of the revenues to make a tax shift possible. Mostly revenue neutrality is ensured by lowering social security contributions and/or income taxes Reduced rates often apply to businesses, yet the United Kingdom demonstrates the opposite. Social aspects are taken into account by the choice of tax bases, reduced rates or social welfare compensation. The size of the tax shift is up to 5% of total tax revenues and up to 2% of GDP. Mostly slight positive impacts on energy consumption, economic growth and jobs occur, proofing a politically attractive double dividend. Often first ETR is introduced, then the reduction of Environmentally Harmful Subsidies (EHS) is tackled.

4 German experiences with Environmental Tax/Fiscal Reforms The government (Social Democrats + Greens) introduced an ETR on 1. April 1999: Increase and broadening of energy taxes and reduction of social security contributions [and increase of environmental protection promotion programmes] Steady increase of several energy taxes in 5 small steps between Steady decreases of social security contributions (here: pensions fund) The reform resulted in a 2-3% reduction of overall CO2 emissions between , while 250,000 jobs were created in the energy efficiency and renewable energy industry 2005: Environmentally harmful subsidies were reduced, road pricing for lorries was introduced 2011: Air ticket tax and nuclear fuel tax were interoduced 4

5 China On behalf of GTZ, Kai Schlegelmilch was the International Coordinator of the Task Force on Economic Instruments for Energy Efficiency and the Environment of the China Council for International Cooperation on Environement and Development (CCICED an international advisory body for China). Operating from Final report published at the Annual General Meeting (AGM) in 11/2009 Recommendations on tools like : - increasing energy productivity - bank products such as credits, guarantees - insurance premiums, liability schemes - environmental taxation (including reducing environmentally harmful subsidies and introducing an energy/carbon tax) Possible impact: Announcement that before 2015 China will introduce a carbon tax 5

6 Indonesia As 3 rd largest democracy and as one of the largest oil exporters ID has a crucial role to play regarding EFR. Climate policy is high on the national agenda given the push thanks to the international climate conference on Bali Is shifting between subsidising domestic use and benefiting from internationally relatively high world oil prices. But in recent years managed to implement a substantial reduction of fossil fuel subsidies. Indonesia has already a very good basis of EFR-elements in its fiscal system, see next slides. Within the process of decentralisation, the law on provincial and local taxes (28/2009) was adopted and the tax bases determined therein have a direct or indirect relevance for the environment. Furthermore regions are prohibited from collecting taxes other than those types of taxes. This supports the conditions for further implementing EFR-elements. 6

7 Indonesia The following types of taxes are already in place due to law on provincial and local taxes (28/2009) which comprises many environmentally related taxes, but still offers ample room for increases and reducing exemptions in terms of tax basis: 1.provinces: Motor Vehicle Taxes; Excise/Taxes For Transfer of Ownership of Motor Vehicle; Taxes on Fuel for Motor Vehicles; Surface Water Taxes; Cigarette Taxes. 7

8 Indonesia The following types of taxes are already in place due to law on provincial and local taxes (28/2009) which comprises many environmentally related taxes, but still offers ample room for increases and reducing exemptions in terms of tax basis: 2. districts/towns: Hotel Taxes; Restaurant Taxes; Entertainment Taxes; Advertising Taxes; Street Lighting Taxes which is in fact an electricity tax Taxes on Non-Metal and Non-Rock Minerals; Parking Taxes; Ground Water Taxes; Taxes on Swallows Nests; Rural and Urban Land and Building Taxes; Excise/Taxes for Acquiring Right on Land and Building 8

9 Indonesia Recommendations within my work done on behalf of Danida for the Indonesian MoE (KLH) regarding EFR-proposals end 2011: 1. Appraise law on provincial and local taxes (28/2009) as it comprises many environmentally related taxes 2. Draft KLH regulation on Economic Instruments (derived from 32/2009) compliments this law 28/2009 with potential for a) further increases of tax and charge rates of law 28/2009 b) further economic instruments outside the law 28/ Independent of the draft KLH regulation, KLH (in fact, any Ministry) can propose to MoF changing the tax legislation. Such a proposal for a tax shift (tax bads, not goods ) could be: a. Reduce federal state value added and income taxes b. Allow for higher shares of local environmentally related taxes c. Reduce transfers to local level to keep balance of power 9

10 Thailand Experiences with economic instruments Is limited and usually confined to the levying of non-compliance fees or charges 1. Excise Tax Act: a) Taxes on petroleum products, automobiles, motorcycles, electronic appliances, batteries b) differential tax measures for batteries with recycled / non-recycled lead different fuel types, such as diesel with high sulphur content has been successfully ended i.a. through a higher tax rate in comparison to those on diesel with low-sulphur content. 2. Wastewater charges and solid waste collection fees. But not enforced particularly successfully Reasons: Regional or local governments responsible for enforcement are concerned that they will lose future elections, should they enforce these instruments. Lack of capacity to monitor wastewater pollution and to enforce these instruments 10

11 Viet Nam In a nutshell: Viet Nam will be heavily affected by climate change Viet Nam realised that its past environmental policy instruments are not that effective Since 2012: Taxes enacted on energy/transport, but also covering CFCs, plastic bags, pesticides Viet Nam is now the first Asia-Pacific country with a relatively comprehensive legislation on environmental taxes. 2015: tax rates were tripled using favourable conditions 11

12 IMPACT ASSESSMENT, RESULTS Results: CO2 emissions drop by 2.3% under the low and by 7.5% under the high scenario (up to 9.3 mill. t in 2012 alone) Transport and fishery sector are strongly affected Social effects: all income groups equally affected Economic: considerable shift in purchasing power from households to government Negligible GDP growth impact Viet Nam Fiscal: increase in revenue by 7.3% in high scenario

13 Viet Nam SUCCESS FACTORS Trusted relationship to high level political decision makers in the Ministry of Finance Continuous Advisory by a short term consultant from a ministry ( consultations among equals ) Provision of access to international networks and knowledge through conferences and study tour Right mix of modalities (study tours, advisory, workshops, trainings) National staff instrumental for know how transfer including Vice- Minister himself Strong ownership and dynamic leadership on the partner side GIZ/consultant provided only comments on the law (MoF wrote it)

14 Green public spending Urgent need for such spending given the environmental challenges Need to build up an environmental infrastructure which increases the resilience against natural disasters such as typhoons and climate change, but also to provide reasonable alternatives to people/investors Domestic funding sources are mostly by far not sufficient. Spending needs to be boosted, but often environmental concerns are not adequately mirrored in the budget. State revenues as a means to achieve sustainable development is reflected in the 2015 Addis Ababa Action Agenda: Agreement to mobilise and effectively use domestic resources generated by economic growth and supported by additional measures i.a. sound social, environmental and economic policies, including [ ] adequate fiscal space. It also recognised that progressive, more efficient and effective tax systems with a broadened tax base to enhance domestic revenue as part of national sustainable development strategies South Korea boosted its investment in green infrastructure in the financial crisis 2008/9 and hence used a great opportunity International funding sources are e.g. the UN-Green Climate Fund (thanks to the Paris Agreement), World Bank loans and grants, Germany s International Climate Initiative (ICI), other donor initiatives 14

15 Asia-Pacific experiences: Environmental Tax/Fiscal Reforms Summary and Conclusions Many Asia-Pacific countries are considering the introduction of broad energy taxes, often in the context of an Environmental Tax/Fiscal Reform (ETR/EFR). But the most advanced is Viet Nam with a relatively comprehensive environmental tax legislation since 2012: Vietnam applies broad energy taxation, no exemptions for industry, but including shipping/ aviation; additionally taxes on plastic bags, CFC and pesticides are applied. In any case, it is much appreciated that countries in Asia-Pacific also move in this direction and discover the multiple benefits of EFR as many European countries are doing since Joining our Green Budget Asia (GBA) Initiative: GBA was proposed by GBE to run along similar lines like GBE: provide for an exchange of experience with EFR instruments play an important role in awareness raising of the potential of EFR boost political acceptance of EFR-measures in the region as a whole bring together experts from many countries and diverse fields (government, academia, NGOs, industry) to compare experiences and learn from best practice examples in other (East) Asian countries. 15