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:
Examples of taxes to be implemented or increased:
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.
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.
Criticism
The policy has been criticised as being neo-liberal for moving the tax burden from the rich to the poor by reducing progressive income tax which emphasise ability to pay and thus tax the rich at a higher rate than the poor, in favour of proportional consumption taxes which tax the rich and poor at an equal rate.
Last updated: 08-17-2005 15:27:50
