Green tax revenues fall dramatically

Revenues from taxes levied as environmental measures are no longer producing
the return they once did, according to KPMG.

Quoting figures from the Organisation for Economic Cooperation and
Development, KPMG’s report, Taxation and the Environment, shows between
1996 and 2005 the proportion of GDP accounted for by environmental taxes across
29 of the largest economies in the world fell by an average of 0.2%.

‘Given the increase in government rhetoric on green issues in the past ten
years, and the enthusiasm among campaigners for new environmental taxes, it is
odd to see that the apparent importance of environmental taxes in so many
economies has actually fallen,’ said KPMG global head of tax, Loughlin Hickey.

Frank Sangster, head of the environmental tax and incentives group at KPMG
UK, said: ‘It (green taxes) may be so effective in making people change their
behaviour that the revenue from these taxes has fallen.’

An example of this was the plastic bag tax initiated by the Irish government
where they imposed a levy in 2002 which decreased usage overnight from an
estimated 328 bags per person to 21.

Sangster said the money raised by the government levy supports ‘environmental
education and waste management programmes, so it may be a combination of
education and taxation that is working, rather than just taxation.’

He added that the study argues ‘there is no such thing as a pure
environmental tax, just taxes with environmental effects’.

Further reading

Report Sees Decline in Green Taxation

to incentivise green behaviour

puts finishing touches to green budget

Related reading