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Developing green tax policy


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Developing green tax policy

  1. 1. Developing Green tax Policy; EnhancingEnergy Security and AddressingEnvironmental ProblemsRoozbeh Kardooni : PhD Candidate, University of MalayaDr Fatima Binti Kar : Associate Professor, University of Malaya,2th conference on emerging trends in energy conservation – Tehran – Iran
  2. 2. Introduction The green economy has been major theme at the Rio +20 summit in Riode Janeiro, Brazil, on 20–22 June 2012. United Nation EnvironmentProgram (UNEP) has defined a green economy as one that results inimproved human well-being and social equity, while significantly reducingenvironmental risks and ecological scarcities. In its simplest expression,a green economy can be thought of as one which is low carbon,resource efficient and socially inclusive. One of the main reasons that cause increasing attention toward greeneconomy is due to fact that the global community is facing immensechallenges in handling environmental issues.
  3. 3. IntroductionmarketfailuresexternalitiesEnvironmentcrisis
  4. 4. example of market failureThe harm done to humanhealth and the environmentfrom burning fossil fuels is notreflected in its the price .
  5. 5. Green tax, definition of concept Green tax refer to a wide spectrum of fiscal pricing measures thathave the potential to simultaneously increase revenue and fostergreen growth. More specifically, it entails : 1) a shifting of the taxburden from traditional areas of taxation, such as income, saving,and capital gains, to environmentally relevant products and activitieslike fossil fuels and waste; 2) the redirecting of subsidies fromenvironmentally perverse activities toward activities that promotegreen growth and poverty reduction. The entire reform of the fiscalsystem is done with the aim of maintaining revenue neutrality: a netzero increase in the level of taxation on the economy” . Source : The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP),”Green Tax andBudget reform, 2012
  6. 6. Green tax, definition of concept Green Tax reforms generally consist of three types ofapproaches: 1) Reduction or elimination of environmentallyharmful subsidies, including direct public expenditure ,“market price support” and /or exemptions and otherprovisions in environmentally related taxes potentiallyharmful for the environment; 2) Restructuring of existingtaxes according to environmental criteria ;and/or ; 3)Introduction of new environmentally related taxes Sources : Green Tax reforms in OECD Counties; An overview, 2004
  7. 7. Green tax & double dividend concept Green tax reforms are based on the double dividendhypothesis that supports the idea that environmentaltaxes improve welfare through two different channels:first, by improving the environment (first dividend orenvironmental dividend); second, by reducing the pre-existing distortionary taxes . Sources : Green tax reforms and habits, Carlos de Miguel *, Baltasar Manzano Universidad de Vigo andrede, Lagoas-Marcosende, s/n, 36200 Vigo, Spain
  8. 8. double dividendThe United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), “Green Growth: A New Growth strategy forAsia and the pacific”, 2012
  9. 9. Benefit of green tax•In respond to the energy security challenge, Green taxationcan play an important role. Applying green tax policy canhelp to secure supplies, encourage industries andconsumers to use energy more efficiently, and do so inways that sustain both economic and human developmentwhile protecting the environment. Green tax especially canImproving energy security and conservation by loweringenergy and resource intensity, Reducing vulnerability toenergy price fluctuations.Energysecurity• By applying Green taxation, the producer has topay a “real price” for the pollution it imposes onsociety. Since one element of green tax policyconsist of eliminating counterproductive subsidiesthat benefit unsustainable development, movingtoward this approach result in redirecting fundstowards green growth and green economy .Environmentalcrisis
  10. 10. Thank you