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Ecotax (short for Ecological taxation) refers to taxes intended to promote ecologically sustainable activities via economic incentives. Such a policy can complement or avert the need for regulatory (command and control) approaches. Often, an ecotax policy proposal will attempt to maintain overall tax revenue by proportionately reducing other taxes (e.g. taxes on human labor and renewable resources); such proposals are known as a green tax shift towards ecological taxation.
Ecotaxes are examples of pigovian taxes, taxes that attempt to make the private parties involved feel the social burden of their actions.
Contents
[hide]
1 Taxes affected 2 Economic frameworks and strategies employing tax shifting and ecotaxes 3 Progressive or Regressive? 4 Ecotax policies enacted
o 4.1 Registration taxes 5 Worldwide implementation
o 5.1 UK 6 See also 7 References 8 External links
[edit] Taxes affected
Examples of taxes which could be lowered or eliminated by a green tax shift:
Payroll , income, and (to a lesser extent) sales taxes. Corporate taxes (taxes on investment and entrepreneurship). Property taxes on buildings and other infrastructure.
Examples of ecotaxes which could be implemented or increased:
Carbon taxes on the use of fossil fuels by greenhouse gases produced. Old hydrocarbon taxes don't penalize green house gas (GHG) production.
Duties on imported goods containing significant non-ecological energy input (to a level necessary to treat fairly local manufacturers)
Severance taxes on the extraction of mineral, energy, and forestry products. License fees for camping, hiking, fishing and hunting and associated equipment. Specific taxes on technologies and products which are associated with substantial
negative externalities. Waste disposal taxes and refundable fees.
Taxes on effluents, pollution and other hazardous wastes. Site value taxes on the unimproved value of land.
[edit] Economic frameworks and strategies employing tax shifting and ecotaxes
The object of a green tax shift is often to implement a "full cost accounting" or "true cost accounting", using fiscal policy to internalize market distorting externalities, which leads to sustainable wealth creation. The broader measure required for this are also sometimes called ecological fiscal reform, especially in Canada where the government has generally employed this terminology.
Tax shifting usually includes balancing taxation levels to be revenue-neutral for government and to maintain overall progressiveness. It also usually includes measures to protect the most vulnerable, such as raising the minimum income to file income tax at all, or an increase to pension and social assistance levels to offset increased costs of fuel consumption.
Basic economic theory recognizes the existence of externalities and their potential negative effects. To the extent that green taxes correct for externalities such as pollution, they correspond with mainstream economic theory. In practice, however, setting the correct taxation level or the tax collection system needed to do so is difficult, and may lead to further distortions or unintended consequences.
Taxes on consumption may take the "feebate" approach advocated by Amory Lovins in which additional fees on less sustainable products — such as sport utility vehicles — are pooled to fund subsidies on more sustainable alternatives — such as hybrid electric vehicles.
However, they may simply act as incentives to change habits and make capital investments in newer more efficient vehicles or appliances or to upgrade buildings. Small changes in corporate tax rates for instance can radically change return on investment of capital projects, especially if the averted costs of future fossil fuel use are taken into account.
The same logic applies to major consumer purchases. A "green mortgage" such as a Location Efficient Mortgage, for example, recognizes that persons who don't drive cars and live generally energy-efficient lifestyles pay far less per month than others and accordingly have more to pay a heftier mortgage bill with. This justifies lending them much more money to upgrade a house to use even less energy overall. The result is a bank taking more per month from a consumer's income as utilities and car insurance companies take less, and housing stock upgraded to use the minimum energy feasible with current technology.
Aside from energy, the refits will generally be those required to be maximally accommodating to telework, permaculture gardens for example green roofs, and a lifestyle that is generally localized in the community not based on commuting. The last, especially, raises real state valuations for not only the neighborhood but the entire surrounding region. Consumers living sustainable lifestyles in upgraded housing will generally be unwilling to drive around aimlessly
shopping, for instance, to save a few dollars on their purchases. Instead, they'll stay nearer to home and create jobs in grocery delivery and small organic grocers, spending substantially less money on gasoline and car operation costs even if they pay more for food.
[edit] Progressive or Regressive?
Some green tax shift proposals have been criticized as being fiscally regressive (a tax with a marginal rate that decreases as the taxpayer's income increases). Taxing negative externalities usually entails exerting a burden on consumption, and since the poor consume more and save or invest less as a share of their income, any shift towards consumption taxes can be regressive. In 2004, research by the Policy Studies Institute and Joseph Rowntree Foundation seemed to confirm this view.[1]
However, conventional regulatory approaches can affect prices in much the same way, while lacking the revenue-recycling potential of ecotaxes. Moreover, correctly assessing distributive impact of any tax shift requires an analysis of the specific instrument design features. For example, an ecotax can have a "lifeline" design, in which modest consumption levels are priced relatively low (even zero, in the case of water), and higher consumption levels are priced at a higher rate. Furthermore, an ecotax policy package can include revenue recycling to reduce or eliminate any regressivity; an increase in an ecotax could be more than offset by a decrease in a (regressive) payroll or consumption tax. Some proponents claim a second benefit of increased employment or lower health care costs as the market and society adjust to the new fiscal policy (these claims, as with the claim "tax cuts create jobs," are often difficult to prove or disprove even after the fact).
Furthermore, pollution and other forms of environmental harm are often felt more acutely by the poor, who cannot "buy their way out" of being receptors of air pollution, water pollution, etc. Such losses, although externalities, have real economic welfare impacts. Thus by reducing environmental harm, such instruments have a progressive effect.
[edit] Ecotax policies enacted
Environmental law
Theory
Earth jurisprudence
Intergenerational equity
Polluter pays principle
Precautionary principle
Public trust doctrine
Sustainable development
Specific issues
Asbestos
Brownfield land
Illegal logging
Poaching · Unlawful fishing
Mitigation of global warming
International environmental law
Wildlife Enforcement Monitoring System
War and environmental law
Instruments of Environmental policy
Ecotax · Market-based instruments
Environmental impact assessment
v • d • e
An ecotax has been enacted in Germany by means of three laws in 1998, 1999 and 2002. The first introduced a tax on electricity and petroleum, at variable rates based on environmental considerations; renewable sources of electricity are not taxed. The second adjusted the taxes to favor efficient conventional power plants. The third increased the tax on petroleum. At the same time, income taxes were reduced proportionally so that the total tax burden remained constant. The regional government of Baleares Islands (then held by an ecosocialist coalition) established an eco tax in 1999. The Baleares Island suffer a high human pressure from tourism, that at the same time provides the main source of income. The tax (1€ per person per day) would be paid by visitors staying at tourist resorts. This was criticized by the conservative opposition as contrary to business interests, and they abolished the tax in 2003 after seizing back the government.
[edit] Registration taxes
The Netherlands, Portugal, Spain and Finland have introduced differentiations into their car registration taxes to encourage car buyers to opt for the cleanest car models.
In the Netherlands, the new registration taxes, payable when a car is sold to its first buyer, can earn the owner of a hybrid a discount up to €6000. Spain reduced taxes for cars that produced less CO2 (some of which will be exempted), while the more consuming, like SPV and 4WD saw their taxes increased.
Austria has had a registration tax based on fuel consumption for several years.
[edit] Worldwide implementation
[edit] UK
Under the Current Labour government (1997 to present), despite Gordon Brown’s promise to the contrary, green taxes as a percentage of overall taxes have actually fallen from 9.4% to 7.7%, according to calculations by Friends of the Earth [2]
In a 2006 proposal, the U.K.'s then-Environment Secretary David Miliband had the government in discussions on the use of various green taxes to reduce climate-changing pollution. Of the proposed taxes, which were meant to be revenue-neutral, Miliband stated: "They're not fundamentally there to raise revenue."[3]
Miliband provided additional comments on their need, saying: "Changing people's behaviour is only achieved by "market forces and price signals", and "As our understanding of climate change increases, it is clear more needs to be done."[3]
[edit] See also
Electronic Waste Recycling Fee Energy Tax Act Environmental crime Feebate Free-market environmentalism Green politics Pigovian tax Sin Tax Environmental Tariff
[edit] References
1. ̂ BBC NEWS | UK | Green taxes 'would hit poor most' 2. ̂ Madden, Peter. "No excuses for inaction - It is perhaps surprising that business is beginning to
make progress on the environment while our elected governments are wasting precious time".
The Guardian. http://www.guardian.co.uk/environment/2007/nov/05/greenlist.comment. Retrieved 2008-09-28.
3. ^ a b "Miliband Draws Up Green Tax Plan: Environment Secretary David Miliband Has Confirmed the Government Is Holding Discussions On Tackling Climate Change Using Green Taxes". BBC News website. 2006/10/30 11:04:01 GMT. http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/2/hi/uk_news/6095680.stm. Retrieved 2009-06-15.
[edit] External links
This article's external links may not follow Wikipedia's content policies or guidelines. Please improve this article by removing excessive or inappropriate external links.
Redefining Progress Sightline Institute's research and resources on green taxes Creative Taxing Can Save the Environment Fiscallygreen.ca Earthrights.net A Distributional Analysis of Green Tax Reforms - Gilbert E. Metcalf WorldMoralMovement.org - Green tax as part of a moral tax code noe21 - capacity and action centre promoting solutions to global climate change GreenTaxSwitch.com - campaign by the Liberal Democrats in the UK for a switch to
green taxes STERN REVIEW: The Economics of Climate Change - An executive summary of a
report by economist Nicholas Stern (27pg pdf file) BBC article on Stern's Report Market-Based Instruments for Environment and Related Policy Purposes Konrad Pola on Green Policy as a Secondary Motive in Taxation TAx on CArbon(TACA)
[hide] v • d • e
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Privacy policy About Wikipedia Disclaimers NAINITAL: It may not be good news for tourists but for Mussoorie it could literally
mean a breath of fresh air. The Uttarakhand government has decided to introduce eco tax upon entry into the Queen
of Hills with immediate effect, which is a first in the history of Mussoorie. It will be in line with the Naini lake tax charged from tourists in Nainital.
The tax — of Rs 100 from heavy vehicles and Rs 30 from cars and jeeps — will be levied by Mussoorie Municipal Board either through its employees or contracted agents from motorists at Kolhukhet — Mussoorie’s entry point. Those planning to spend their holidays at Uttarakhand’s most pictureseque resort should now be ready to cough up ecological tax as their mite towards preserving the pristine greenery of the region.
Speaking to reporters on Tuesday, chairman of Mussoorie Municipal Board, O P Uniyal, said each private bus will be charged Rs 100 whereas the driver of a small vehicle will have to pay Rs 30 per entry. Two-wheelers will pay Rs 5.
“The decision has been taken. The government will strictly endorse these taxes with immediate effect,’’ said chairman Uniyal.
The objective is to collect revenue for preserving the town’s environment, its heritage, apart from maintaining its sanitation and cleanliness. The money will be spent on encouraging plantation and educating tourists against using plastic while in Mussoorie.
“We don’t know whether the new tax will get good response or not, but we have done this to help preserve Mussoorie’s beauty and eco-system without causing any setback to tourism,’’ said a senior IAS officer in Dehradun.
The State government has allayed apprehensions that it might give in to the mining lobby and
scrap the imposition of green cess on mining rejects.
Read more >>
Date: 31/10/2009
Source:
Herald (Panjim)
Tags
Eco Tax , Goa , Minerals , Mining Waste , Mining
Posted under:
News
Tourists will have to pay eco tax for entry to Mussoorie
Nainital: It may not be good news for tourists but for Mussoorie it could literally mean a breath of
fresh air. The Uttarakhand government has decided to introduce eco tax upon entry into the
Queen of Hills with immediate effect, which is a first in the history of Mussoorie. It will be in line
with the Naini lake tax charged from tourists in Nainital.
Read more >>
Date: 23/09/2009
Source:
Times Of India (New Delhi)
Tags
Eco Tax , Ecotourism , Mussoorie , Nainital (D) , Uttaranchal (Uttarakhand) , Environment
Posted under:
News
Mining lobby blows hot as season begins
The mining lobby in Goa appears to be headed for a collision course with the Government over
moves to levy surcharge on mining rejects, even as the season kicked off today on an optimistic
outlook.
The State Government had proposed to levy a green cess of Rs 30 per tonne on mining rejects as
a major step towards moping up State’s revenue by Rs 375 crore.
Read more >>
Date: 17/09/2009
Source:
Herald (Panjim)
Tags
Eco Tax , Goa , Mining Waste , Mining
Posted under:
News
China Explores Putting A Tax On Carbon
China's Ministry of Finance is developing a study that explores the effects and impacts of levying
environmental taxes to curb overall emissions of greenhouse gases.
The report, which was described to the National Business Daily last week, could be out within a
month, according to Su Ming, the deputy director of a think tank within the Ministry of Finance.
Read more >>
Date: 06/05/2009
Source:
Planet Ark (Australia)
Tags
Carbon Dioxide , China , Climate Change , Eco Tax , Green House Gases , United States Of America (US) , Environment
Posted under:
Feature Articles
Gone with the ban?
It is a move that may draw flak or resistance, but when you look at the bigger picture, a ban on
plastic bags and levying a tax on their use will do our surroundings a world of good.
Read more >>
Author(s): Mukta Rohra
Date:
May 2009
Source:
Planet Earth pp: 27-29
Attachments:
Gone with the ban.pdf
Tags
Australia , Bangladesh , China , Delhi , Eco Tax , Global , High Court , Hong Kong , Kenya , Legislation , Plastics , Public Interest Litigation (PIL) , South Africa , United States Of America (US) , Waterlogging , Environment
Posted under:
News
Arun Shourie favours green taxation system
The Rajya Sabha MP and former Union Minister, Mr Arun Shourie, has stressed the need for India
to move ahead in introducing green taxation system.
Addressing presspersons on Tuesday during his visit to Mangalore, Mr Shourie said that India
should be a pioneer in introducing green taxation in the world.
Read more >>
Date: 08/04/2009
Source:
Business Line (New Delhi)
Tags
Eco Tax , Ecology , Karnataka , Mangalore , Environment
Posted under:
Feature Articles
Green niche market development : A model with heterogeneous agents
This article introduces a multiagent simulation framework for investigating the emergence of
niche markets for environmentally innovative products. It clarifies how consumer preferences,
business strategy, and government policy interact during market development. The framework
allows investigation of the effects of uncertainty and agents' corresponding coping strategies.
Read more >>
Author(s): Clinton Andrews,
David DeVault
Date:
Apr 2009
Source:
Journal of Industrial Ecology Vol: 13 Issue: 2 pp: 326-345
Attachments:
Green Niche Market.pdf
Tags
Air Pollution Control , Auto Industry , Cars , Eco Tax , Environment Economics , Fuel Efficiency , Green Products , Honda Motor , Hybrid Electric , Statistics , Toyota Motor , United States Of America (US) , Transport
Blogs :: Climate/Politics
Sunita Narain
SUNITA NARAIN, director of CSE and editor of Down To Earth. Environmentalist, and an early watcher of global climate politics, co-authored ‘Global Warming In An Unequal World: A Case Of Environmental Colonialism.
Climate lectures don’t make lessons
Share
28 February 2009 : Posted by Sunita Narain
Tags : Climate Change, Climate Mitigation, Developing Countries, Eco Tax, Emission Targets, Public Transport
There was a jamboree in my town recently, a gathering of the powerful and famous, to discuss
the climate change agreement the world must carve out in Copenhagen by end 2009. But what
happened was rather discomforting: We Indians were publicly lectured, castigated and rapped on
our knuckles for being bad boys and girls by one and all.
Share
View all posts by author4 Comments
Posted under:
Opinion
Climate lectures don’t make lessons
There was a jamboree in my town recently, a gathering of the powerful and famous, to discuss
the climate change agreement the world must carve out in Copenhagen by end 2009. But what
happened was
There was a jamboree in my town recently, a gathering of the powerful and famous, to discuss
the climate change agreement the world must carve out in Copenhagen by end 2009. But what
happened was
Date: 27/02/2009
Source:
Down to Earth
Tags
Climate Change , Climate Mitigation , Developing Countries , Eco Tax , Emission Targets ,
Public Transport
Posted under:
Reports and Documents
Greening growth in Asia and the Pacific: follow-up to the World Summit on Sustainable Development
This report explains three basic principles of Greening growth: quality of economic growth, eco-
efficiency of economic growth, and environmental sustainability vis-a-vis environmental
performance: and four pillars of Green growth: eco-tax reform, sustainable infrastructure, the
greening of business and sustainable consumption.
Date: Dec 2008
Source:
United Nations
Attachments:
GreeningGrowth.pdf
Tags
Asia , Consumption Patterns , Eco Tax , Economic Development , Green Buildings , Infrastructure Development , Sustainable Development , Environment , India
