UK ranked in top six for using tax as green policy tool

The UK is one of the top six active countries to successfully use tax as a tool to drive sustainable corporate behaviour and achieving green policy goals.

The findings were contained in the first KPMG Green Tax Index, launched yesterday, which places the US at the top, Japan second and the UK third.

KPMG claims its index can ascertain how governments are using their tax systems to respond to global challenges including energy security, waste and recycling, water and recourse scarcity, pollution and climate change.

KPMG’s environmental tax team head Barbara Bell said: “Green taxation is a rapidly evolving and increasingly complex area. Businesses face a multitude of challenges worldwide, and those which operate on a multinational basis face a sometimes bewildering array of different taxes and incentives.

“And, yes, this is an area of tax management which requires an investment of knowledge and effort, not to mention resources. If addressed with knowledge and pro-activity, however, the challenges can become opportunities.”

Bell claimed that governments were increasingly using green taxes as a tool to change corporate behaviour and to assist with environmental policy objectives.

She cited the example of the UK’s landfill tax, which, introduced in 1996 has had a marked and widely acknowledged impact in significantly reducing the amount of waste going to landfill.

According to Bell, KPMG’s index shows that at least 30 new green tax incentives, penalties or significant regulation changes have been introduced in the countries studied since January 2011.

The rankings show that the UK has a green tax approach balanced between penalties and incentives, scoring most highly in the area of carbon and climate change.

The US topped the index due to its extensive programme of federal tax incentives for energy efficiency, renewable energy and green buildings.

Japan, which came second, contrasted with the US in that it scored higher on green tax penalties than it did on incentives.

Conor McGlone

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