ACCA - The global body for professional accountants
This can only be of benefit to business – it has to remembered that cutting carbon usage can also create competitive advantage for business. Even in the midst of a financial crisis, consumers view environmental issues as important to their purchasing decisions and a business’s credentials on environmental issues has a significant impact on consumer buying choices
—Chas Roy-Chowdhury, head of taxation , ACCA

Policy makers and governments should not see environmental taxation as a cure-all, says ACCA (the Association of Chartered Certified Accountants) in a policy paper called 'Green taxation in a recession'

Due to the on-going global recession and economic uncertainty, governments are looking to environmental taxation as a possible way to bolster tax revenues. ACCA says that for this to happen successfully, governments need buy-in from business and their electorates.

Chas Roy-Chowdhury, author of the report and head of taxation at ACCA says: 'Tax shifting to environmental taxation cannot both solve the environmental crisis and raise significant tax income long term. This is because a system aimed at reducing what it is taxing, if successful, will eventually destroy its own tax base.'

ACCA’s paper offers a number of recommendations about green taxation, asserting that first and foremost a global approach to green taxation is needed.  

Chas Roy-Chowdhury explains:  'Environmental taxes are an efficient but controversial way for governments to raise revenue. Most agree that making the polluter pay should be a principle of a modern tax system. But this needs to be done with care – especially to avoid companies relocating and taking the pollution problem with them.' 

Recommendations in ACCA’s s paper include:

  • Incentivise environmental goals, for example by reducing VAT on sustainable products
  • Governments should be as transparent as possible about green taxation, and they need to run public awareness campaigns to influence and speed up change – for instance with energy efficiencies
  • Governments should also consult widely before any policy changes are made, and prepare to reverse any changes if unintended consequences happen
  • Environmental taxes should be made more explicit and transparent, with costs and benefits analysed and assessed

Chas Roy-Chowdhury adds: 'ACCA questions how resilient environmental taxes will prove to be in the future. But we also believe that governments must use tax policy as an instrument of positive change by incentivising investment in new cleaner technologies across a wide range of industries. 

'This can only be of benefit to business – it has to remembered that cutting carbon usage can also create competitive advantage for business. Even in the midst of a financial crisis, consumers view environmental issues as important to their purchasing decisions and a business’s credentials on environmental issues has a significant impact on consumer buying choices.'

Chas Roy-Chowdhury concludes: 'Environmental taxation, which was almost unheard of 25 years ago, is now being widely used to assist in the fight against climate change, with taxes around the world on everything from emissions trading, plastic bags to energy consumption, car use and waste disposal. Business understands that ‘business as usual’ is no longer an option; but to endure a competitive and attractive economy in which to invest, green taxes need to be, clear, credible and certain.'

- Ends - 

For more information, please contact:

Alana Sinnen, ACCA Newsroom
+ 44 (0) 207 059 5807
+44 (0) 7715 812120
alana.sinnen@accaglobal.com 

Helen Thompson, ACCA Newsroom
+44 (0)20 7059 5759
+44 (0)7725 498654
helen.thompson@accaglobal.com 

Notes to Editors

  1. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. 
  2. We support our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence. 
  3. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.