Experts pointed to the importance of changing the tax structure to advance the climate transition, at a tax symposium organised by the European Commission’s Directorate-General for Taxation and Customs Union (DG TAXUD) on Monday 28 November. They also see it as a matter of tax fairness.
Vitor Gaspar, Head of Fiscal Affairs at the IMF, identified four major drivers of change: - digitalisation, which is leading to an information revolution; - population dynamics, which will lead to taxation of consumption instead of income; - globalisation, which shows that the destination principle is more robust than the source principle; - global public goods, which will lead to the introduction of a corrective tax for climate and health.
For him, “fair taxation must include green taxation”. “Without fairness, there is no trust”, he warned, calling for more trust between countries to avoid fragmentation.
Femke Groothuis, Co-Founder and President of the think tank Ex’tax Project Foundation, pointed out that only 0.2% of tax collection is based on pollution and is not applied effectively. “The tax system is a barrier to the climate transition”, she said, because it is not linked to the circular economy and is too labour-intensive.
In her view, there is a need to review the tax strategy and rebalance its structure to accommodate new business models. Their profitability is linked to the way taxes are collected. “We need to address the fundamental issues to prepare for the competitiveness issue”, she added.
But the Russian aggression against Ukraine has upset the energy transition. Marnix Van Rij, State Secretary for Taxation in the Netherlands, regretted that the long-term climate change strategy had to be changed because of this event. “We have had to move to the short term and we have postponed some adaptation measures”, he lamented.
Rita De La Feria, Professor of Tax Law at the University of Leeds, gave the example of energy product taxation (see EUROPE 13052/2). She raised the dilemmas facing European countries: should VAT or excise duties be reduced on these products to help citizens? But should we do so, given that they are bad for the environment? “Fair taxation is not a monolithic concept, there are different types of fairness”, she concluded. (Original version in French by Anne Damiani)