On their best environmental behaviour

Environmentally Related Taxes in OECD Countries: Issues and Strategies
OECD Observer
Page 64 

There are a number of ways to influence environmental good conduct – one is to make sound practices profitable, another is to make bad practices taxable. This OECD report by environmental experts and fiscal specialists shows how.

Environmentally related taxes reinforce the “polluter pays principle”, by which the costs of pollution are reflected in the price and output of goods and services that pollute. For instance, the US levies a “gas-guzzler” tax on cars that pollute heavily, varying between US$1 000 and 7 700 on the sale of energy-inefficient vehicles. Taxes on non-refillable beverage containers encourage recycling and reduce waste.

Over the past decade, most OECD countries have integrated environmentally related taxes into environmental policy, for several reasons. They are relatively easy to administer and may help tackle global warming, because they can provide incentives for both technological innovation and further reductions in polluting emissions. They also feed government coffers: revenue from environmentally related taxes averages roughly 2% of GDP in OECD countries, and 6% of total tax revenues.

Still, there are problems to overcome. Industry has been coddled with exemptions and rebates, for fear that the burden of extra fees and charges will drive companies to relocate to green-tax “havens”. The result is that households and transport take the burden of most of these taxes.

Yet business should not be frightened by environmentally related taxes, and the report suggests several options for imposing them more effectively without reducing competitiveness. For instance, a two-tier rate structure, rather than the use of full exemptions, could be used, with lower rates for the more internationally exposed sectors.

In any case, while some businesses may become less competitive with a burden of green taxes, others, more benign, could be made more competitive. Ecological accountability can eventually be made profitable, so that industry is less taxing on the environment.

©OECD Observer No 229, November 2001 




Economic data

GDP growth: +0.6% Q2 2018 year-on-year
Consumer price inflation: 2.9% Sept 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.2% Sept 2018
Last update: 13 Nov 2018

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Watch the webcast of the final press conference of the OECD annual ministerial meeting 2018.
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018