Green tax shift
From Free net encyclopedia
A green tax shift is a fiscal policy which lowers the taxes on income including wages and profit, and raises taxes on consumption, particularly the unsustainable consumption of non-renewable resources.
Examples of taxes to be lowered by a green tax shift:
- payroll and income taxes.
Examples of taxes to be implemented or increased:
- Carbon taxes on the use of fossil fuels;
- Taxes on the extraction of mineral, energy, and forestry products;
- Licence fees for fishing and hunting;
- Specific taxes on technologies and products which are associated with substantial negative externalities;
- Garbage disposal taxes;
- Taxes on effluents, emissions and other hazardous wastes.
Tax shifting may include balancing taxation levels to be revenue-neutral for government, industry or consumer groups.
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 rebates on more sustainable alternatives — such as hybrid electric vehicles.
The object of a green tax shift is often to implement a "full cost accounting", using fiscal policy to internalize market distorting externalities, which leads to higher efficiency and sustainable wealth creation.
The green tax shift has been criticized as being a regressive tax as it taxes consumption rather than income and as it is contrary to the concept of progressive taxation as it does not distinguish between rich and poor.
Green tax shifts enacted
A green tax shift 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.