Do We Need Environmental Taxes And Charges

Do We Need Environmental Taxes And Charges? The Pros And Cons Of Environmental Taxation Presented by: Prof. Dr. Nagy Date: 24 November 2022 Conditions For Applying Environmental Taxation - The following issues arise in relation to the conditions for environmental taxation: • The imposition of taxes and charges, • Tax rates, • Tax burden, • Administrative issues, • Border adjustment. Tax Rates - The optimal tax rate has a fundamental impact on the efficiency of taxation. - Where possible, it is preferable to base eco-taxation on the quantity of the product and not on its value, because quality deterioration creates a loophole. - Of course, the level of taxation should be reviewed periodically, as it may need to be revised in the light of inflation, relative price changes or the achievement of environmental objectives. Tax Burden - The problem with the issue of tax burden is that the tax burden can be passed on by the taxpayer, i.e. the taxpayer and the person who bears the tax burden differ in several cases. - The burden of the tax or charge may be borne by the consumer, the owner of capital, the owner of labor, the owner of a natural resource. - Depending on their market position, taxpayers may try to pass on the tax, which may cause social or economic problems. Therefore, when introducing a tax, it is necessary to analyses the effects of the tax to be introduced if it is passed on. Administrative Issues - Environmental taxes and charges represent a relatively low revenue from fees compared to the total tax and fee revenue and the main tax categories (VAT, personal income tax, etc.). - It is preferable to use tax authorities specialized in the collection of traditional taxes to collect the tax, as setting up a separate authority is not a cost-effective solution. - Integrating taxes into the existing tax and fee system also reduces administrative costs. International Aspects - Poorly chosen taxation can affect international competitiveness and the efficiency of economic instruments. - When production or activity is taxed, only domestic production is affected, but nevertheless, if the tax in a neighboring country on the substitute product is lower, competitiveness problems may arise. - In the case of consumption, however, not only the domestic product but also the imported product is taxed. - If the product is substitutable, the demand for the substitute product may increase. Some Benefits Of Environmental Taxes: - Static incentives • Efficient management of a given technology for emission performance. Taxes provide an incentive to the polluter, making him interested in using the technology efficiently to reduce pollution. - Dynamic incentive • - Taxes provide incentives for new technologies and for pollution reduction. Regulation of a general nature • The taxes are uniform for all polluters, so the regulation cannot take into account the circumstances of individual firms. Some Disadvantages Of Environmental Taxes: - Uncertain environmental impact • Environmental taxes have an incentive effect and do not guarantee pollution levels, unlike direct regulation. - Pollution avoidance activities • Environmental taxes can also have harmful effects on the environment, which may be more severe than in the absence of full regulation. - Policy considerations • - Environmental taxes are not always politically acceptable. Distributional effects • Environmental taxation applies to transport, the carbon content of fuels or energy in general.