ACCA believes one of the most important examples is to change behaviour that can damage the environment, an approach supported by a majority of the general public across the G20 (Public trust in tax: surveying public trust in G20 tax systems, ACCA 2021, downloadable here).

Accountants should play an active part in efforts to pursue the United Nations’ Sustainable Development Goals, and promote the concept of ‘tax shifting’ by increasing carbon taxes on the use of fossil fuels while reducing them for payroll, income or corporate taxes (Tax as a force for good: rebalancing our tax systems to support a global economy fit for the future, ACCA 2018, downloadable here).

Governments must aim to use tax policy as an instrument of positive change by encouraging investment in new cleaner technologies across a wide range of industries. When combined with other tax reductions, green taxes should be seen as a positive step rather than a threat to taxpayers.

Governments across the world are beginning to take significant steps towards creating a low-carbon economy, and accountants should help to identify the emerging fiscal incentives that will be a crucial part of this.

Green taxation is one area where it is particularly important that there is international coordination, partly because of the global nature of the environmental problem and partly to deter polluting companies from moving operations to avoid the taxes. Arbitrage opportunities here would defy the purpose of protecting the environment.

However, it should be acknowledged that a significant shift in the tax base to rely on green taxes at currently recognisable rates will probably prove unsustainable in the long term. Conventional wisdom suggests that where such taxes are imposed on emissions and general pollution, a successful system will erode its own tax base.

The way forward will be through progressively increasing rates on a well-balanced and broad tax base, as well as relying on regulation or other measures where these are better than tax at driving down pollution.