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Environmental tax reform in Asia and the Pacific

Author

Listed:
  • Jacqueline Cottrell

    (Green Budget Europe and Green Budget Germany)

  • Damian Ludewig

    (Green Budget Europe and Green Budget Germany)

  • Matthias Runkel

    (Green Budget Europe and Green Budget Germany)

  • Kai Schlegelmilch

    (Green Budget Europe and Green Budget Germany)

  • Florian Zerzawy

    (Green Budget Europe and Green Budget Germany)

Abstract

Environmental tax reform (ETR) is an important and integral part of a sustainable development strategy. ETR is an effective way of integrating economic, social and environmental costs into the price of goods and services while creating incentives for sustainable practices. In recent years, some developing countries in the Asia-Pacific region have introduced schemes to phase out fuel subsidies and are moving towards further reforms to modernize their fiscal governance and tax practices and make greater use of ETR as a primary component of national development strategies. Indeed, several countries in the region are forerunners for ETR outside OECD countries, including India, Indonesia, Thailand, Viet Nam and China. This paper examines the rationale for the implementation of ETR in Asia-Pacific and its possible role in the achievement of the Sustainable Development Goals (SDGs). It offers policymakers practical guidance on how governments can reform tax systems and use fiscal policy to drive the transition to a low-carbon, climate-resilient economy while taking into account the specific challenges of developing countries in the region. The paper is divided in two parts. Part I provides background information on ETR and looks at experiences in OECD countries. Part II focuses on ETR in the Asia-Pacific region and makes a series of recommendations for policymakers, examining strategic and political economy considerations typically encountered by policymakers during the process of implementing environmental taxes, as well as practical issues relating to tax design, policy planning and implementation. Finally, the paper looks at international and regional policy processes upon which policymakers in Asia-Pacific can draw on for support and consultation while implementing ETR measures.

Suggested Citation

  • Jacqueline Cottrell & Damian Ludewig & Matthias Runkel & Kai Schlegelmilch & Florian Zerzawy, 2017. "Environmental tax reform in Asia and the Pacific," MPDD Working Paper Series WP/17/05, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  • Handle: RePEc:unt:wpmpdd:wp/17/05
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    File URL: http://www.unescap.org/sites/default/files/publications/WP-17-05_Environmental%20Tax%20Reform.pdf
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    References listed on IDEAS

    as
    1. Katrin Millock & Céline Nauges & Thomas Sterner, 2004. "Environmental Taxes: A Comparison of French and Swedish Experience from Taxes on Industrial Air Pollution," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(01), pages 30-34, April.
    2. Timothy Besley & Torsten Persson, 2014. "Why Do Developing Countries Tax So Little?," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 99-120, Fall.
    3. Dirk Willenbockel, 2011. "Environmental Tax Reform in Vietnam: An Ex Ante General Equilibrium Assessment," EcoMod2011 3082, EcoMod.
    4. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    5. Frank Convery & Simon McDonnell & Susana Ferreira, 2007. "The most popular tax in Europe? Lessons from the Irish plastic bags levy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(1), pages 1-11, September.
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    Cited by:

    1. Lai, Yu-Bong, 2019. "Environmental policy competition and heterogeneous capital endowments," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 107-119.

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    More about this item

    Keywords

    Environmental tax; fiscal policy; tax structure;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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