Fundamental principles of ecological taxation

Transcription

1 Fundamental principles of ecological taxation Federica Pitrone, Maastricht University 18th Ius Commune Conference, Maastricht, 28 November 2013 Department 1

2 Outline 1. Preliminary comments: the greening of the tax system 2. The concept of ecological taxation 3. Principles of ecological taxation Department 2

3 1. Preliminary comments the greening of the tax system It refers to the emphasis on environmental concerns in a tax system European Commission and other international and supranational organizations (OECD, IMF, World Bank) keep on calling for an increased use of environmental taxation. Department 3

4 1. Preliminary comments the greening of the tax system Why Ecological Taxation? OECD, EEA, European Commission To combat climate change need to intensify environmental protection Fiscal measures directly address the market failure by «pricing in» environmental costs to bring the costs of pollution and other costs of using the enviroment (externalities) into the prices of the goods and services produced by economic activity. They provide an incentive to avoid the tax by generating less of the substance being taxed. They help to move our economies towards an eco-efficient use of energy and resources by raising the price of nature. Department 4

5 1. Preliminary comments the greening of the tax system Why Ecological Taxation? OECD, EEA, European Commission Financial crisis - new and alternative sources of tax financing It also provides fiscal revenue: may be used to address environmental problems directly; may be used to subsidise producers or consumers to shift to more environmentally-friendly activities; may be used to reduce other taxes, e.g. on labour a shift of tax burden to environmental taxes increases economic efficiency and welfare. Department 5

6 1. Preliminary comments the greening of the tax system The introduction of environmental taxes can bring along many juridical problems. The concept of environmental taxation; Principles of ecological taxation: taxes or para-commutative taxation? Problematic interplay between the introduction of environmental taxes and the ability to pay principle. Department 6

7 2. The concept of ecological taxation A good child has many names : pollution taxes, green taxes, ecological taxes, ecotaxes, Pigouvian taxes, environmental charges, environmental levies. Environmental taxes Environmental charges/fees Department 7

8 2. The concept of ecological taxation Fiscal levies/measures: environmental taxes, charges, fees No deposit-refund system the amount collected is refunded once the product is returned or properly disposed of No penalty or fine punitive tools, rather than fiscal measures (severe damage to the environment) No liability owed by private parties to the government to compensate for environmental damage No EU Emission Trading Scheme Department 8

9 2. The concept of ecological taxation What is an Environmental tax? Eurostat 1996 and several indicators for classifying a tax as environmental : tax base: the physical base on which the tax is levied has a scientifically verifiable negative impact on the environment; incentive action: the taxation may act as an economic incentive for environmental improvement; declared purpose: the political intention of the legislator is environmental improvement. Only the tax base should be used as a solid ground for a definition - based on commonly accepted scientific evidence. Department 9

10 2. The concept of ecological taxation What is an Environmental tax? Environmental taxes: tax whose tax base is a physical unit of something that has a proven, specific negative impact on the environment when used or released. Two main categories: Taxes on pollutants: tax base is a unit of emission of a specific pollutant. Taxes on products: they apply to specific products such as fuels, batteries, one way packaging. Destination of tax revenues: not relevant. Department 10

11 2. The concept of ecological taxation What is an Environmental tax? OECD - environmentally related taxes: taxes levied on tax-bases deemed to be of particular environmental relevance.. Same definition? Broader Wider range of taxes: positive impacts could also be covered (not only environmentally damaging nature of the tax base) Department 11

12 2. The concept of ecological taxation Definition of environmentally related taxes the one to be preferred but too many grey areas. Any need to have such a detailed definition of ETs? Not comprehensive of all kinds of taxes with an impact on environment: e.g. taxes without a polluting tax base but introduced to achieve specific environmental objectives. Choosing the polluting tax base as an element of identification of ETs is not satisfactory e.g. renewables - discrimination under the current ETD, taxed at the same rate as the energy source they are intended to replace (e.g. biodiesel is taxed the same as diesel). Department 12

13 2. The concept of ecological taxation No environmental taxes but taxes with environmental effects to change behaviors and production structures in order to promote environmentally friendly behaviors; to discourage environmental damages and/or to reduce the use of natural resources; positive effects on the environment. Incentive Ets Financing Ets Fiscal Ets Taxes on tobacco discourage environmental damages on the air quality Department 13

14 3. Principles of ecological taxation Environmental issues: global concern They cannot be addressed only at the national or local level, but need to take into account also the supranational perspective. Multiple layers of taxation Department 14

15 3. Principles of ecological taxation International level Duty to protect the environment European level Prevention principle EU constraints (e.g. State Aid, nondiscrimination principle, abolition of custom duties) National level Right/duty to protect the environment, ability to pay principle Department 15

16 3. Principles of ecological taxation PPP Prevention principle whoever is responsible for damage to the environment should bear the costs associated with it preventive measures must be taken in case of dangerous activities or activities with well known risk for the environment or human health. Sustainable development development that meets the needs of the present without compromising the ability of future generations to meet their own needs Department 16

17 3. Principles of ecological taxation Polluter pays principle Prevention principle plus sustainable development Para-commutative taxation: e.g. charges/fees Taxes (solidarity) Reparation of the environment Protection /conservation of the environment. Improvement (earmarked) Department 17

18 3. Principles of ecological taxation Problematic interplay between the introduction of environmental taxes and the ability to pay principle Emission/pollution taxes considered not in line with the ability to pay principle It is impossible to measure the taxpayer s ability to pay Department 18

19 3. Principles of ecological taxation Emission taxes and the ability to pay principle 3 possible solutions 1. A supranational principle? 2. Balancing constitutional principles 3. A different interpretation of the ability to pay Department 19

20 3. Principles of ecological taxation Emission taxes and the ability to pay principle 1. A supranational principle? The polluter pays principle/the prevention principle Aims: all social strata tailor their behaviour so as to harm the environment as little as possible => no relevance of the ability to pay. The polluter pays and the prevention principles are compulsory for EU institutions but not for Member States (areas not harmonized). Department 20

21 3. Principles of ecological taxation Emission taxes and the ability to pay principle 2.Balancing constitutional principles The use of environmental taxes is possible because the protection of the environment is covered by the Constitution (e.g. Spanish Constitutional Court) Proportionality test Department 21

22 3. Principles of ecological taxation Emission taxes and the ability to pay principle 3.A different interpretation of the ability to pay principle STARTING POINT: Taxes are needed not only to raise revenue for governmental functions but also for redistributive purposes (to reduce inequality and unequal distributions of wealth). A taxpayer cannot be considered as homo oeconomicus, linked only to his own property, but a person dipped in social relationships advantageous positions that other people do not have should be considered Department 22

23 3. Principles of ecological taxation Emission taxes and the ability to pay principle 3.A different interpretation of the ability to pay principle STARTING POINT: How to define these advantageous positions? The capability approach. When making normative evaluations, the focus should be on what people are able to be and to do, and not only - on what they can consume, or on their income. Amartya Sen: a poor person s( ) freedom from undernourishment would depend not only on her resources and primary goods( ) but also on her metabolic rates, gender, pregnancy, climatic environment, exposure to parasitic diseases and so on. Of two persons with identical incomes and other primary goods and resources one may be entirely free to avoid undernourishment and the other not at all free to achieve this. Department 23

24 3. Principles of ecological taxation Emission taxes and the ability to pay principle 3.A different interpretation of the ability to pay principle CONSEQUENCES: The taxpayer can be taxed, if the legislator decides so, on criteria ( advantageous positions ) linked to his existence in the society and not necessarily linked to his wealth A tax base linked to taxpayers wealth is not necessary in order to respect the ability to pay principle Department 24

25 3. Principles of ecological taxation Emission taxes and the ability to pay principle 3.A different interpretation of the ability to pay principle LIMITS: The tax legislator can choose these criteria on a discretionary basis, as long as these advantageous positions : are measurable and economically valuable; are reasonable and not arbitrary. Department 25

26 3. Principles of ecological taxation Emission taxes and the ability to pay principle 3.A different interpretation of the ability to pay principle EMISSION TAXES: Advantageous position : the use of the environment or the authorization to use it It is measurable and economically valuable; It is reasonable and not arbitrary. Department 26

27 Thank you very much for your attention! Department 27