18 January 2022
Heads Ups for Green/Environmental Tax
While the concept of green tax or ecological tax is not a new one, it is however, becoming a much bigger topic of discussion in today’s global economy amongst its global tax policies markers for their respective countries.
To some extent, the growth phenomenon in green tax could be largely attributed to environmental activists, who now collaborates and work with world leaders in an effort to shine a light of awareness on environmental issues.
Green tax is what the governments levy on sources of pollution or activities considered harmful to the environment like carbon emission. The idea is to discourage the use of inefficient sources of energy or pollutants and to encourage the implementation of environmentally-friendly alternatives that complement or avert the need for regulatory approaches or oversights.
Why do we care?
We care because green tax is likely to become a much bigger tax topic in the future as global tax policy makers including the OECD; EU, etc., become increasingly focused on their members’ contributions to environmental activities. Some of their tax measures have included carbon taxes; green tax incentives; carbon border adjustments, etc. It has been reported that the American Jobs Plan of President Joe Biden’s administration has gone as far as incorporating tax incentives for clean energy in the country’s made in America Tax Plan.
What you should know
Most governments now assess how green taxes/ecological taxes and incentives can be used to address climate change in their respective countries. Most companies and their leaders are now reevaluating their strategies; their overall operational risks, and their business models to take into account the tax effects of inefficient sources of energy or pollution. Currently, the OECD reports on carbon pricing monitor carbon taxes and emissions trading schemes in its respective countries.
For questions or inquiries on this topic, please contact
Dr. Frank at clifford.frank@lexefiscal.com.