Fiscal legitimacy of environmental taxation: challenges for green growth policy

PurposeThis paper analyzes the role that the climate change concern (CCCi) has on the willingness to accept an environmental tax. The author aims to grasp how individual general tax preferences can differ with respect to the specific (environmental) tax. He focuses attention to the Italian case since it has been argued that the potential acceptability of a carbon tax in Italy is relatively high, and this topic has been scarcely explored so far among Italian citizens (Rotaris and Danielis, 2019).Design/methodology/approachThe author conducted an online survey among 514 Italian economics students.FindingsThe CCCi positively influences the environmental tax morale (ETMi). The general tax morale (TMi) positively affects the specific (environmental) TMi. The CCCi alters individual tax preferences. The author evidenced that also subjects with low TMi turned out to be willing to pay an environmental tax if aware of the environmental issues.Research limitations/implicationsAlthough the author used a common methodology in this strand of research, he is aware that in an online survey individuals can be influenced by the self-reporting and hypothetical choice bias (see Swamy et al., 2001), that in turn can characterize their reported preferences. Moreover, even if economics university students are commonly used as a subject pool in experimental economics settings, and although several studies showed that the behavioral responses of students are largely the same as those of nonstudents in identical experiments (for a discussion see Alm, 2012; Choo et al., 2016), there is awareness that in this case, they are not taxpayers yet (Barabas and Jerit, 2010).Practical implicationsThe author’s results remark the importance of increasing climate change awareness among people to let them be more willing to pay the environmental tax, for instance through investments in sensibilization campaigns on the importance of energy source usage and climate-related topic. Then, an increase in the general TMi leads to an increase in the specific (environmental) TMi. The author’s evidence showed that people with high tax morale logically recognize the positive impact of paying an environmental tax when the CCCi increases, since the more the theme becomes important, the larger the willingness to pay the specific tax. For this reason, policymakers should carry on campaigns to increase the general level of TMi to increase the overall tax compliance level and the relative tax revenues, following the guidelines given by the Organisation for Economic Co-operation and Development (2019) to support taxpayer education programs, such as including TMi research and analysis into education programs, improving the ease of paying taxes or strengthening revenue–expenditure links to build the social contract.Social implicationsIt should be paramount to increase awareness about environmental topics among people in general and among those who are relatively tax immoral. The author’s results remark on the importance of targeting energy and environmental tax policies to groups rather than to individuals. According to this evidence, we support the use of nonmonetary tools to nudge people in the environmental transition by changing their behavior in energy use, for instance through the taxation on fuel and other nonrenewable energy resources.Originality/valueIt is the first empirical study that analyzes the impact of CCCi on the environmental TMi in Italy, in particular controlling for the role of the general willingness to pay taxes (TMi). To obtain individual attitudes toward tax payment, most of the empirical studies in behavioral economics employ international surveys. For studies across citizens living in European countries, the European Social Survey (ESS) and European Values Study (EVS) represent the most used ones (see, for instance, Martinez-Vazquez and Torgler (2009) in Spain; Torgler and Werner (2005) in Germany; Nemore and Morone (2019) in Italy). However, these surveys do not allow to study the relationship between the environmental and general TMi across the same subject pool. In fact, despite the ESS (2016) provides individual responses about the willingness to pay an environmental tax, it does not provide information about the general individual attitude toward tax payment (this information is contained only in the ESS wave of 2004, hence referring to a different subject pool). On the contrary, each wave of the EVS (i.e. 2008, 2017) provides information about the general individual attitude toward tax payment, but this survey does not provide a question regarding the willingness to pay an environmental tax. Therefore, to obtain information about the willingness to pay both general and environmental taxes, across the same subject pool, it is needed to carry out a survey.

The rapid development of the global economy has also caused the deterioration of the natural environment. The traditional economic growth method can no longer meet the development requirements of the times for the environment. The realization of sustainable and green development of human society has become the consensus of the whole society. To improve the degree of the greening of the economy, it is necessary to coordinate the management of various departments and to integrate the concept of environment and resources into economic growth. It is an important way for government departments to formulate corresponding sustainable green growth policies by relying on laws to achieve the strategic goals of sustainable green growth. In order to explore the role of government agencies in sustainable green growth through the enactment of relevant laws, this article takes China as the study of the environment. From the perspective of environmental protection tax law, through the establishment of the relationship model between ET and economic variables and ET and environmental indicators, using vector autoregression and system dynamics simulation analysis methods, the effect of ET on the environment and economy is studied. In the analysis of the impact on the environment, the impact of the auxiliary policy of ET on sustainable green growth is discussed. The experimental results show that the impact of environmental tax (ET) on GDP is more obvious. The simulation results show that when the proportion of technology investment is 35%, the promotion effect of sustainable green growth is the best. That is to say, the formulation of relevant laws and policies by government agencies has a certain role in promoting sustainable green growth.

The aim of this paper is to refer to tax harmonization and tax competition in the European Union, as concepts that are in the focus of international tax law. Both concepts, over the last decade, are in the focus of interest in the international organizations, academic circles and business society. Even thought, tax harmonization and tax competition are vastly emphasized as antipodes, both of them, have advantages over the tax systems of the member states. This paper compares the arguments for tax harmonization and tax competition and explores the interplay between these concepts through a literature review. Summing the effective operation of the internal market, looking through the prism of the European Union, and based on theoretical arguments, the member states should aim towards higher tax harmonization, or at least towards tax coordination due to the current processes of enhanced globalization and digitalization. Those processes have impact on tax systems of member states through enhancing the tax evasion, aggressive tax planning and double non-taxation of cross border activities of the persons, especially the multinationals enterprise groups. Hence, even though the “good” tax competition has its advantages, the member states should refrain from further eroding its own and other countries tax bases.

Green growth policies confront firms and workers with adjustments that may create welfare costs for different segments of the population and cause reductions in near-term actual versus potential gross domestic product. There is little evidence on the cost of adjustment to climate change measures, and only limited evidence for more general environmental policies, especially in developing countries. Therefore, this paper canvasses the research on adjustment costs to trade policies to draw analogies and highlight differences compared with the potential impacts of green growth policies. Trade policies affect prices and work directly on technology choice. In the presence of adjustment costs, firms may experience impacts on wages, employment, and incentives to adopt alternative technologies. Both types of trade policy impacts may be amplified by technology availability and credit constraints. Many green growth policies are likely to work via the same mechanisms, that is, taxes on emissions or changes in technology requirements. However, trade liberalization is typically seen as offering higher total incomes, albeit with winners and losers. Green growth policies are thought of as welfare-enhancing at the collective level but may not be income-enhancing at the individual level. This implies much more difficulty in measuring the potential gains associated with green growth policies.

A study of the level of tax harmonization in the countries of the Eurasian Economic Union has been carried out. The points of view of various authors on the problems of tax harmonization and tax competition are considered. The objectives of the study are to assess the degree of tax harmonization of the EAEU countries, as well as to analyze the impact of tax harmonization on economic growth. The study used econometric methods of macroeconomic analysis. It has been established that despite the rather long time that has elapsed since the creation of a single economic union, tax harmonization has not taken place in the EAEU countries. The size of the main tax rates in the EAEU countries differs significantly. The highest level of tax burden is in Armenia. The least time is needed to prepare and pay taxes in Russia. The smallest share of income tax in the total profit of companies is paid by Kyrgyz taxpayers. In turn, the lack of tax harmonization in the EAEU creates preconditions for tax competition between countries, associated with the creation of attractive conditions for taxpayers who will be ready to transfer their business to the country with a more favorable tax regime. As a result of the study, it was found that in conditions of tax competition, Russia and Kazakhstan are in the most advantageous position. The study revealed the negative impact on economic growth of a high tax burden and a significant length of time required for the calculation and payment of taxes. A close correlation has been established between total tax revenues and the growth of the economies of the EAEU countries.

PurposeIt is basically known that the oil and gas industry contributes to various forms of pollution through air, acid rain and water, as well as different kinds of illnesses in humans and aquatic animals. Eventually, this adversely contributes to climate change owing to increases in emission levels in various stages of oil and gas operations ranging from extraction, refining, transportation and even consumption. Therefore, the purpose of this paper is to produce a simplistic model for compliance with environmental taxes in the oil and gas industry as an effort to curtail such adversities. This attempt is expected to set a new pace for heated debates towards the production of a robust environmental tax compliance model through further research. Specifically, it has examined the effect of extensive regulation and use of power in ensuring compliance with environmental taxation via enforcement mechanisms.Design/methodology/approachThe study used a quantitative research design through a positivist paradigm. The population of the study was 115 respondents who were identified as tax experts in three different stakeholder groups (regulators, operators and enforcers) in the Nigerian oil and gas industry. Out of this population, 103 served as the final sample of the study. The data collected from these tax experts were analyzed through partial least squares structural equation modelling.FindingsThe results revealed that both extensive regulation and the use of power have high likelihoods of enhancing compliance with environmental taxes through enforcement actions by the relevant authorities within the oil and gas industry.Research limitations/implicationsThe results implied the need for policymakers to deploy these enforcement mechanisms to enhance compliance with environmental taxes in the oil and gas industry, which will eventually reduce the environmental menace and ensure cleaner production. The paper also has highlighted the need for future researchers to expand this discussion through an elaborative approach either through disaggregating the variables studied here or integrating voluntary compliance mechanics into the model for further understanding of the drivers of environmental tax compliance. It also implied the need to utilize larger sample in other oil producing countries to improve generalization of results.Originality/valueThe work could be the pioneer in proposing and validating the enforced environmental tax compliance model in the oil and gas industry.

The European Green Deal, the European Union's roadmap for a green transition, was launched in 2019. With this strategy, the European Union aims to stop carbon emissions by 2050 through green policies in many sectors, especially in the energy sector. The European Union also uses various environmental tax instruments to achieve this goal. Environmental taxes, one of these instruments, are considered to have a regressive effect on employment and welfare, especially in carbon-intensive industries. In order to mitigate these negative social and economic impacts of the green transition, the European Union has implemented the Just Transition Mechanism. However, it is not known whether the Just Transition Mechanism will be sufficient after the newly introduced regulations such as the plastic tax, the Energy Tax Directive, and the Carbon Border Adjustment. This study conducted a panel data analysis covering the period between 1994-2020 to analyze the impact of environmental taxes on employment. In this panel of 29 European countries, the dependent variable is the unemployment rate while independent variables are environmental taxes, gross domestic product, renewable energy supply and energy efficiency. As a result of this analysis, it is concluded that environmental taxes have an increasing effect on unemployment. Therefore, based on the panel data analysis, it is concluded that the Environmental Tax Reform package, which will provide double dividend in terms of both environmental and employment, should be implemented in addition to the Just Transition Mechanism.

Motivated by the concern that corporate income tax (CIT) competition may have eroded the tax base, this paper calculates average effective tax rates to measure the impact of CIT competition, including the widespread use of tax holidays, on the tax base for 15 countries in the Caribbean. The results not only confirm erosion of the tax base, but also show that CIT holidays must be removed for recent tax policy initiatives (such as accelerated depreciation, loss carry forward provisions, and tax harmonization) to be effective. These findings suggest that the authorities should either avoid granting CIT holidays or rely more on other taxes (including consumption taxes such as the value-added tax) in order to broaden the tax base.

The paper analyses the role of tax competition in global economy. How can tax systems respond to the challenge – by international cooperation or by national rules, by tax harmonisation or by tax competition? In this paper we approach the question as a matter of global governance. Tax competition is seen both as a means and as an object of global governance. Our conclusion is that there is no universal answer to the question: competition or harmonisation? Attempts to govern the processes of global economy on a national level may easily lead to tax competition. On the other hand, at least at the supranational level, i.e. at regional or global level, the goals and mechanisms of governance seem to emphasise harmonisation. Nowadays especially the OECD has become an important actor or forum for cooperation in taxation. It has succeeded in many ways in preventing and reducing harmful tax competition. The soft law mechanisms developed by the OECD have often been converted into the hard law mechanisms on national level. The governance activities have been based on both soft law and hard law mechanisms.

The article considers the current trends of environmental tax reform in the world. The main types of fiscal policy instruments in the countries of the European Union, the USA, Great Britain and others are analyzed. Indicators of changes in greenhouse gas emissions as a result of environmental tax policy in the world are presented. There is currently a clear trend in the world to change environmental taxation, in particular raising environmental tax rates and introducing new types of environmental taxation. Given the European vector of foreign economic policy, Ukraine should develop mechanisms and tools for environmental taxation, taking into account EU requirements and norms. It is important that the increase in environmental tax rates and the introduction of new types of taxes, fees or quotas is integrated with the use of economic instruments to protect and stimulate the development of domestic enterprises, so that increasing tax payments do not reduce their competitiveness or quality of goods and services. The adopted European Green Investment Plan (EGDIP), or the Sustainable Europe Investment Plan (SEIP) is analyzed in the article as the investment basis for The Green Deal. Under a new law agreed between the member states and the EU Parliament, the European Union is committed to reducing carbon emissions by at least 55% by 2030 compared to 1990 levels. For Ukraine, as a neighboring EU country that has signed an Association Agreement with the EU, the Carbon Border Adjustment Mechanism (CBAM) is important. This is one of the key initiatives to achieve the goals of the European Green Deal. Its main purpose is to prevent carbon leakage by creating a level playing field for EU producers in imports of electricity, cement, aluminium, fertilizer as well as iron and steel products, as specified in the annex. The CBAM will be implemented in 2026, following a transition period of three years characterized by data collection only. The priority directions of development of ecological policy for Ukraine in the conditions of European integration are defined. It is also advisable to clearly define the directions and purposes of using revenues from environmental taxes and fees in local and state budgets.

The study examined environmental tax and its impact on pollution control in Nigeria. It specifically examined the impact of environmental tax on air pollution, it examined the impact of caron tax on air pollution, it examined the impact of environmental tax on water pollution, lastly it examined the impact of environmental tax on waste disposal. The study predicated on planned behaviour theory and value believe norm theory of environmentalism. Primary data source was explored in presenting the facts of the situation. Purposive probability sampling techniques was used to select targeted respondents. Data collected was analysed using descriptive statistics for 183 questionnaires. The findings revealed that environmental tax has significant effect on pollution control. This is based on the fact that a large percentage (90.8 percent) of the respondents is in concurrence with the argument that environmental tax has significant effect on pollution control. It was concluded that environmental tax has positive and significant effect on pollution control in Nigeria. The researcher recommends that considering the seriousness of this environmental hazards which posed a great threat to the life of the people, Federal Government of Nigeria should design a tax process will permit environmental tax policies, so that the levy of tax be designed placing its burden on those who are responsible for causing a particular environmental problem, or problems and also make provision for statutory incentives to minimize administrative cost to the government and compliance cost imposed on the tax payers.

The Korean government has recently established national and sectoral mid-term greenhouse gas (GHG) reduction targets. Specifically, the country must reduce its total GHG emissions by 30% compared to business-as-usual (BAU) by 2020. This study has two main purposes. First, the study aims to measure the economic impacts of pursuing and achieving the government’s GHG reduction targets. Second, it aims to estimate each major policy’s potential GHG emission reductions in the various sectors. We use the computable general equilibrium model and develop three scenarios to examine the economic and environmental impacts of Korea’s green growth policies – a baseline scenario wherein the national economy proceeds without green growth policies; scenario A, wherein the government imposes national and sectoral emission reduction targets without adopting green technologies; and scenario B, wherein the government adopts policy and technology as renewable portfolio standard and carbon capture and storage. The simulation results from scenario A indicate that the government’s mid-term targets could pose a significant challenge to Korea’s national economy. In addition, the results from scenario B indicate that low-carbon green policy and technology will play an important role in reducing GHG emissions.

The increase in the number of violations of tax legislation on the payment and settlements of taxes and fees in Ukraine, as well as the complication of the forms and means of committing such violations, necessitate a detailed study and improvement of the theoretical and methodological foundations of forensic audit. In addition, the lack of a forensic audit of settlements related to certain types of taxes and fees, among the certified and recommended for use in the Register of forensic audit methods, determines the relevance and timeliness of the research topic. The purpose of this article is to substantiate theoretical and methodological provisions and develop practical recommendations for the forensic audit of settlements related to the payment of taxes and fees. The article uses the following research methods: induction and deduction, analysis and synthesis, abstract-logical, cause-and-effect relationship. The results of the study are: study of the dynamics of tax crimes in Ukraine in recent years; substantiation of the main types of tax violations that are objects of forensic audit; determination of the features of the methodology of forensic audit of settlements related to the payment of taxes and fees; generalization of the evidence base, which is the basis for a forensic audit of settlements related to the payment of taxes and fees; development of a general algorithm for forensic accounting expertise of settlements related to the payment of taxes and fees, in the context of the main stages: preparatory, organizational, research, final. Attention should be paid to the generalization of the main procedures used at the research stage, in the context of the main types of tax settlements during conducting an expert study of adjusted tax revenues, tax expenses; calculation and payment of value added tax, personal income tax, and environmental tax. The results of the study should contribute to the further development and improvements of the theoretical and methodological foundations of forensic audit of settlements related to the payment of taxes and fees, a full and comprehensive study of the actual circumstances of the case, and also aim to create opportunities to increase the certainty of the conclusions of forensic auditors.

The deteriorating global environment has attracted wide attention in various countries. How to curb environmental pollution and achieve sustainable economic growth has become an urgent problem that we must face. As an effective tool for pollution control, environmental tax has been implemented in many developed countries and has achieved good results. As the largest developing country in the world, China introduced the first environmental tax law in its history in December 2016, which is regarded as a major reform of the green tax system. To explore the implementation effect of environmental tax in China, this paper takes 3867 Chinese listed enterprises (2015-2020) in Shanghai and Shenzhen A shares as the research sample and explores the microeconomic effect of environmental tax reform using the difference in difference (DID) method. It is concluded that the environmental tax reform can produce a positive impact on the corporate profit margins while curbing the enterprise pollution behavior. This positive effect comes from the investment improvement effect and the cost-saving effect, and this effect is heterogeneous between different regions and property rights enterprises. Therefore, the design of the tax system must be implemented with different measures. Environmental taxes have achieved positive policy results in China, contributing to sustainable economic growth. This tax reform has an important reference value for the developing countries in the industrialization stage.

The aim of this study is to determine the direction of causality between economic growth and environmentally oriented taxes between two countries, China and India. Further, it investigates which country is leading in environmental protection race by imposing and collecting more environmental taxes. The novel element of this study is that this is the first study comparing two economic rivals by environment taxes. The dataset consists of environmental taxes and its proportion to GDP and total taxes, transportation taxes, GDP and adjusted net savings for China and India. The data are taken from the organization of Economic Cooperation and Development (OECD) data bank from 2009 to 2018. The study utilizes the Granger causality to test the causal relationship between environment taxes and economic growth. The findings of the study posit that the imposition of environmental taxes will not only make the big economies environmental friendly but with sustainable economic growth.