Introduction to Green Tax & Budget Reform (GTBR)

Transcription

1 Introduction to Green Tax & Budget Reform (GTBR) Green Growth: A Path to Good Governance By Ian Barnes Environment and Development Division United Nations Economic and Social Commission for Asia and the Pacific Region INTRODUCTION 1

2 What is GTBR? Fundamental fiscal policy instrument Key driver for sustainable infrastructure, greening business, and sustainable consumption and production. Two major components: Green Taxation and Green Subsidy Reform

3 Public Policies Command and Control (CAC): 1) Setting of Standards, 2) Monitoring 3) Enforcement Monetary Policy: 1) buying and selling of government bonds, setting interest rates Fiscal Policy: 1) collecting and spending of government funds (e.g. taxes, subsidies, and public procurement) Market-based instruments (MBI): send price signals to markets (e.g. taxes, subsidies, tradable permits) INTRODUCTION 3

4 A few words on the present system of capitalism, markets and governance

5 Market & Government Failure WHY DO WE NEED GTBR? 2

6 WHY DO WE NEED GTBR? 3

7 Market & Government Failure WHY DO WE NEED GTBR? 4

8 WHY DO WE NEED GTBR? 5

9 Towards a New Paradigm Price signals directly affect economies consumption & production patterns WHY DO WE NEED GTBR? 6

10 ETR: Environmental/Ecological Tax Reform EFR: Environmental Fiscal Reform GTBR: Green Tax and Budget Reform BACKGROUND AND THEMATIC OVERVIEW

11 Environmental/Green Tax Defining Environmentally Related Taxes OECD, IEA and the European Commission have agreed to define environmentally related taxes as any compulsory, unrequited payment to general government levied on tax-bases deemed to be of particular environmental relevance. The relevant tax-bases include energy products, motor vehicles, waste, measured or estimated emissions, natural resources, etc. Taxes are unrequited in the sense that benefits provided by government to taxpayers are not normally in proportion to their payments. Requited compulsory payments to the government that are levied more or less in proportion to services provided (e.g. the amount of wastes collected and treated) can be labeled as fees and charges. The term levy covers both taxes and fees/charges. The Political Economy of Environmentally Related Taxes, OECD 2006 MAJOR COMPONENTS OF GTBR: GREEN TAXATION 1

12 Revenue Neutrality Shift the Tax Base from Labour to Green Tax what we burn not what we earn Al Gore MAJOR COMPONENTS OF GTBR: REVENUE NEUTRALITY 1

13 Revenue neutrality in eco-tax reform Source: Benoit Bosquet Environment tax reform: does it work? A survey of the empirical evidence Ecological Economics, vol.34, no. 1 July 2000 pp

14 Click to add title What is EFR? There something unbelievable about the world spending HUNDREDS OF BILLIONS OF DOLLARS to subsidize its own DESRUCTION. (Earth Council) Remove perverse subsidies (e.g. fossil fuel) Recycle environmental tax revenue into GG projects MAJOR COMPONENTS OF GTBR: GREEN SUBSIDY REFORM 1

15 Green Subsidy Reform Includes: Direct/indirect grants or payments policies policies policies

16 Subsidy Reform in Indonesia In 2008 the oil price reached $120 per barrel The Indonesian budget for fuel subsidies was Rp135,1 billion The high oil price increased subsidy budget to Rp200 billion Took money from other programs e.g. education, healthcare, small business credit facilities, infrastructure development So, were forced to undertake subsidy reform and raised the fuel price Simultaneously introduced programs to reduce burden on low income families, e.g. direct cash assistance, food sustainability program low price rice

17 Options for Revenue Recycling MAJOR COMPONENTS OF GTBR: REVENUE RECYCLING

18 BENEFITS OF GTBR: GTBR

19 Green Growth Interlinkages BENEFITS OF GTBR 2: DRIVER FOR GREEN GROWTH

20 Double Dividend Hypothesis Double Dividend Hypothesis Improved Environmental Quality Increased employment A Double dividend can emerge when environmental taxes replace other distortionary taxes. Inflationary effects on labor salaries can be neutralized when social security or healthcare contributions are substituted with environmental taxes Goulder (1995) Parry (1995) BENEFITS OF GTBR 3:

21 First Results of Germany s ETR More Energy saving technologies Energy efficiency Car sharing Gas-powered cars (x10) Bio-fuelled cars (x2) Job creation (+ 250,000) Renewable energies Tax shift towards nature Fuel consumption CO2 emissions (2-2.5%) Overall tax burden Pension costs (5.6 billion) Costs for industry (1 billion) Empty truck travel Imported fossil fuels Less Source: Adapted from the presentation on Experiences with the German ETR, 2006, Green Budget Germany,

22 Addressing Social and Distributive Concerns Design process is key Regressive? Revenue recycling Thresholds & Life line tariffs Lump-sum payments ADDRESSING SOCIAL AND DISTRIBUTIVE CONCERNS

23 Administrative Costs GTBR is cheaper than traditional Command and Control Approaches! In Germany administrative costs are LOWER than other taxes! ADMINISTRATIVE COSTS 1

24 Strong political conviction and vision Inter-ministerial collaboration Clear public understanding of environmental problems & instruments to correct them Effective promotional/education campaigns Involvement of relevant stakeholders

25 Keys to successful Implementation Inform public in advance Sequencing Incremental phasing-in Complementary policies Cross-ministerial collaboration Political leadership Stakeholder involvement Measures for competitiveness and regressivity

26 THANK YOU!