Environmental Policy

II. Basic Issues Pertaining to Environmental Taxes and Charges - D. :Utilization of Economic Instruments in Environmental Policies - Taxes and Charges

II. Basic Issues Pertaining to Environmental Taxes and Charges

D. Use of Tax Revenue and Form of Introduction

As the implementation of an environmental tax in itself serves as a means to achieve a government policy, the revenues can be thought of as general revenue. On the other hand, it is possible to use the revenue for environmental protection and seek impact from both taxation and expenditure.

If the purpose of the revenue is not specified, "environment" may be considered an excuse to increase general sources of revenue, making it difficult for the public to accept the tax. However, efforts should be made to explain why economic measures are necessary and work to reach a general consensus.

Looking at examples abroad, there are countries that take a neutral stance on revenue and move to ease other taxes because they consider these taxes as incentives to promote economic activity that takes environmental protection into consideration. Meanwhile, other countries use revenues as sources of implementing government policies, taking into account the scale and standard of taxation as well as the environmental policies. Thus, each country bases their policies on their own unique domestic situation.

Reference

The specification of the use of revenues from environmental taxes and charges in OECD countries covers a wide range of areas. Historically, this served to promote implementation of environmental taxes and charges, particularly sewage system and waste processing. (Jean-Philippe Barde, 1995)

Reference

Questionnaire results on the understanding of the public regarding economic measures

Use of revenue from environmental taxes and charges
(agree/disagree, degree of interest)persons (%)
ChoicesTotalAgreeDisagreeDon't know
As fee for environment
preservation projects
776 ( 53.7) 437 ( 66.6) 239 ( 44.4) 100 ( 39.8)
Complementary revenue
(for income tax decrease etc.)
300 ( 20.8) 119 ( 18.1) 143 ( 26.6) 38 ( 15.1)
Should not be specified 109 ( 7.5) 52 ( 7.9) 43 ( 8.0) 14 ( 5.6)
Don't know 260 ( 18.0) 48 ( 7.3) 113 ( 21.0) 99 ( 39.4)
Total 1445 (100.0) 656 (100.0) 538 (100.0) 251 (100.0)
Note:
agree group = agree + relatively agree
disagree group = disagree + relatively disagree
( ) indicates percentage of vertical total

Reference

Budget for environmental protection in the government's fiscal year 1995 budget stood at 2.744 trillion yen. This includes the nuclear-related budget.

While much depends on the level of taxation, if taxation is believed to cause great harm to the economy, one could gradually implement the new policy by revealing to the public the exact schedule of implementation. It will also become necessary to heighten public awareness on environmental preservation by coming up with measures to actually have consumers feel the burden.

The Common CO2/Energy Tax Plan suggested by the EC in 1992 involved a gradual increase in taxes between 1993 and 2000. It was deemed necessary to provide early announcement and gradual implementation in order to smoothly accept the rise in energy prices and lessen the overall impact of the cost on consumers and industry as a whole. The tax was also aimed at minimizing the adjustment cost and promoting investment by providing the future tax rate.


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