etr in industrialising countries - green budget europe · etr in industrialising countries lessons...
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ETR in industrialising countries
Lessonslearnedforgovernments
Oktober6,2016
JacquelineCo6rell
GCETGroningen
Structure
1. Introductorycommentsonthereport
2. RecommendaAonsforgovernmentsinindustrialisingcountries
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Introductory comments
§ Focusontrade-offsbetweenenvironmentaleffecAveness,fiscalobjecAves,privateinvestment,socialequityissuesandpoliAcaleconomyconsideraAons
§ Methodology§ DefiniAonsusedinthereport§ ThankstoD.I.E.–DeutschesInsAtutfürEntwicklungspoliAk/TheGermanDevelopmentInsAtute!
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1. Accurate targe:ng, few exemp:ons
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§ TargetsourceofpolluAonaccurately§ Maximisecoverage§ Onerateforallemissions§ MinimiseexempAons=oXendifficult=firststepsareimportant=preparethegroundforlaterreforms
2. Equip ETR measures with an escalator
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3. Smart instruments mixes to incen:vise private investment ETRshouldbestableandpredictableHowever,ETRdoesn‘tcreatealevelplayingfield,addiAonalmeasuresforinvestorsarenecessaryto:1. ReduceregulatoryRISKforinvestors2. IntroducepoliciestoboostorguaranteeRETURNoninvestmentE.g.Low-costloans,accelerateddepreciaAon,preferenAalinterestrates,long-termpowerpurchaseagreements,private-publicpartnerships,differenAatedimportduAes,taxcredits,provisionofinfrastructure,etc.
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4. If possible, think big!
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4. Tax design and fiscal considera:ons
CountrieswhichhaveintroducedboldermeasureshavehadrelaAvelyposiAveexperienceswithETR–because:1. BoldermeasurescreatemoreopportuniAestosupportstakeholders
duringtransiAonandsecurebuy-in2. Canalso„lockin“ETRmeasures,afiscaldrivercanensurepolicystability3. IntroducingETRwithinbroaderfiscalreformpackagescanreduce
opposiAon,asETRmeasuresareseeninrelaAontoothertaxreforms4. UseETRtoboostfiscalspaceandraiserevenuestoachievegreen
transiAonandtherealisaAonoftheSDGs
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4. Tax design and use of revenues
§ RevenueuseimpactsonGDP,employment,socialequity,environmentaleffecAveness,poliAcalacceptance
§ CanreduceopposiAon,getkeystakeholdersonside(thisalsoreferstoindustryconcernedaboutcompeAAvenessissues)
§ ALLsuchmeasuresshouldbeAme-limited,subjecttoregularreview§ LinkspendingtohighnaAonalpoliAcalprioriAes§ Dividend-sharing§ PoliAcalearmarking
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5. Protec:ng the vulnerable
§ Incomeinequalityhigh–lowerquinAlescanbehardhitbyrisingprices§ LackofcoverageofcompensaAonmechanismsalongmulApledimensionsofinequality
§ Focusontaxbaseswhichtendtobeprogressive§ RetainincenAveeffectofETRifpossibleIdeally,compensaAonmechanismsshould:1. DrivetransiAon(socialtransformaAonpolicies)2. Secondbest–takeadvantageofsynergiesandco-benefits
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6. Administra:ve issues
§ TaggingontoexisAngeffecAvecollecAonmechanismscanreducecostsandpotenAalforcorrupAon/difficulAesinenforcement
§ ETRisdifficulttoevade–appealtothosecountrieswithlargeinformalsector
§ Userevenuestoimproveenforcementandbuildcapacity§ Canresultinimprovedfiscalgovernanceinthefuture
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7. Poli:cal economy
§ CommunicaAon–shouldbeclear,emphasisingrewardsandbenefits,presentETRasapolicychoice
§ Inter-ministerialcooperaAonhelpsavoid“silothinking”§ Mayhelpaddressministerialrivalries§ ThismayrequirenewstructurestofacilitateinteracAonsandcollaborateonpolicy,e.g.Thailand’sclimatechangecommiiee
§ Stakeholderinvolvementalsoimportant§ RevenuescanbeusedtoaddressobstaclestoETRmeasuresassociatedwithe.g.industrystakeholders
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Brief conclusions
§ TheoryandrealityofimplemenAngETRarenoteasytoalign§ Makingastartisimportant!§ Trade-offsmaybenecessary–buttheycanbeimplementedinsuchawaythatenvironmentaleffecAvenessisnotcompromisedmorethannecessary
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