Slow green taxation shift

It was indeed disgraceful of the Prime Minister to resort to alarmist language during his reply to the Leader of the Opposition’s Budget response when it came to the whole issue of green taxes.

...the proportion of tax revenues raised from green taxes should increase over time...- Leo Brincat

The same “queries” were raised, albeit in a slightly different language when Joseph Muscat was interviewed on Bondì+ and I took part in a one-to-one with the Resources Minister on Xarabank.

Two impressions were given on all three occasions:

That this was something that the Labour Party had invented by stealth behind the people’s and the government’s back.

That this could implicitly lead to new burdens on industry at a time when we need to kick-start the economy. To put the record straight, the first talk of a shift towards green taxation was to be found in at least two different pre-Budget consultation documents prepared by the Gonzi Administration: in the run-up to the Budget 2010, which dwelt on sustainable development, and in the pre -Budget document 2012.

Similar references are to be found in the draft national environment strategy that Parliamentary Secretary Mario de Marco is in the process of finalising. By his own preset benchmark, this should be done by year’s end.

In the 2012 pre-Budget document, when commenting on the needed shift towards a green economy, the Gonzi government spoke clearly of the need for market-based policy instruments to internalise environmental costs.

It even went one further by also talking specifically of environment-related fiscal policy inclusive of incentives to direct behaviour towards positive environmental performance.

In the national environment policy, the government was even more daring. It even has a segment, on page 28, on the need to continue to take a stepped approach towards environmental taxation.

Either the Prime Minister himself did not find time to read the recommendations made by his own parliamentary secretary or else, as it is more likely, the Prime Minister, who has long shifted into an opportunistic and alarmist electoral pitch and mode, is trying to pull a fast one to scare people away from the PL.

All this when the PL leader has been very clear that a Labour government will only tackle the issue of green taxes in a very gradualist manner, following intensive consultation and spread over more than one legislature. This would be done without falling into the trap that other governments elsewhere have fallen into, by using such green taxes as an additional burden on the taxpayer rather than as part of a green taxation shift.

To quote from the de Marco document:

“Environmental taxation is designed to put a price on pollution and indiscriminate/excessive use of natural resources while simultaneously stimulating employment creation by reducing the cost of labour.”

I find it rather strange and too much of a coincidence that neither Lawrence Gonzi nor the two main anchormen of Where’s Everybody? chose to pick on this categorical statement by Dr de Marco’s sanctioned document, which has been languishing in draft form since September 2011.

Wherever such revenue-neutral taxes have been planned professionally and seriously, they first set up green fiscal commissions that, rather than working covertly, as seems to be the custom and norm with this Administration, were publicly launched. At a later stage, they even published a final report at the end of their consultations and probes.

Such commissions looked in detail at the whole range of issues surrounding green taxes and environmental tax reform (ETR) with their work covering four broad areas: how green taxes/ETR work; the environmental, economic and social implications of ETR; attitudes to green taxes and ETR and communication of their findings.

In the UK, they were not simply happy just because a final report had been drawn up. They even funded a further year of study to build upon the commissions’ final report.

While I believe strongly in the greening of the economy, I am strongly against any Administration that may think of going it or doing it alone without engaging all the potential stakeholders in the process.

The focus of any would-be Administration might be that of greening our tax system but the key to a green tax shift is and remains that the proportion of tax revenues raised from green taxes should increase over time, in a very gradualist manner, without raising taxation in general.

I am of the opinion too that such a shift could make an important contribution to the “cost-effective resolution of environmental problems”.

But for such a commission to succeed, it needs to be a truly independent body, not affiliated to any political party, and aimed to examine any resultant evident impartially.

It is only on the basis of its results being made public that a subsequent debate should be encouraged in this area.

This professional approach shows how shallow both the Prime Minister and his main media cheerleaders are when they keep on repeatedly hammering for specific areas of green taxation from our end. Even more so when they repeatedly choose to keep mum on the government’s thinking on this admittedly politically-sensitive issue.

brincat.leo@gmail.com

www.leobrincat.com

The author, a member of Parliament, is the Labour Party’s spokesman for the environment, sustainable development and climate change.