Abstract
Abstract Green fiscal reforms would contribute to climate change mitigation, increase the economic efficiency of national tax systems and provide additional public revenues. Some countries in Latin America have already taken first steps towards green fiscal reforms. This outlook article provides an overview of the major challenges for the successful implementation of such reforms and discusses how they could be overcome.
Highlights
Putting a price on greenhouse gas (GHG) emissions can help reduce environmental damage linked to both local pollution and global warming (Bak et al 2017)
In some Latin America and Caribbean countries (LAC), a fossil fuel subsidy reform could cover a large part of the required finance to achieve the Sustainable Development Goals (SDG) goals, for instance, 60% in Bolivia, and 45% in El Salvador
This short article has highlighted several issues that are crucial for the successful introduction and implementation of green fiscal reforms in the context of Latin American countries
Summary
Putting a price on greenhouse gas (GHG) emissions can help reduce environmental damage linked to both local pollution and global warming (Bak et al 2017). Green fiscal reforms that reduce subsidies for fossil fuels and introduce positive prices on emissions would contribute to climate change mitigation, but could increase the economic efficiency of national tax systems and provide additional public revenues that could be employed to advance human development (Edenhofer et al 2015). In December the same year, several countries and subnational governments in the region signed the Paris Declaration on the Price of Carbon in the Americas, which includes commitments to implement national carbon pricing policies, including the promotion of a market.4 These reforms and initiatives are recent, so it is not yet possible to have an accurate diagnosis of their effectiveness, but the projections and preliminary results are encouraging. The section considers how the key challenges for successful implementation of green fiscal reforms could be addressed
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