An employment-friendly tax system

Abstract

From a sustainability perspective, the current European tax systems are out of date. They are largely based on the taxation of labour, and many tax systems are still based on the assumption of a (usually male) primary earner in a standard employment relationship and a female additional earner. Not enough use is made of tax incentives to meet the major challenges of climate and environmental policy, and the redistributive power of tax systems has declined over the long term. In order to make European tax systems fit for the future, a fundamental restructuring is needed that shifts the tax burden away from labour income onto emissions and resource and energy consumption on the one hand and property and higher incomes on the other. More than in almost any other policy area, structural reforms to the tax system have the potential to address the various dimensions of sustainability simultaneously.