Progressive environmental taxation for tax and environmental justice in a global context
This paper intends to build on the sustainable development mandate for international tax cooperation as laid down in articles 9.d) and 10.c) of the Terms of Reference for a UN Framework Convention on International Tax Cooperation (UN FCITC). The framework convention brings the potential to introduce progressive environmental tax measures at a global scale, but must be anchored on strong and clear principles to ensure tax and environmental justice.
The life-support systems of Planet Earth are on the brink of collapse. Seven out of nine planetary boundaries – the Earth system processes essential for maintaining global stability, resilience and life-support functions - have been crossed. The pollution of air, water and soil, the loss of biodiversity and the heating up of the climate are putting people’s health and wellbeing at risk and severely threatening the life prospects for future generations.
The degradation of nature has significant equity and social justice implications: income and wealth, and ecological footprints are strongly positively correlated, the wealthy parts of society, globally, tend to have ecological footprints which extend far beyond what the planet can cope with. When it comes to climate change, it is those people and regions currently and historically least responsible for increasing greenhouse gas emissions who bear the greatest risks to their livelihoods, in particular in the global south. The increased suffering from the ecological damage also comes along with the least capacities to adapt to the consequences of environmental destruction, and with the lack of financial resources to build the infrastructure needed to transform economies towards sustainable levels of production and consumption.
Worldwide increasing inequalities are intensifying the ecological and social polycrisis. Countries where wealth and income inequality has grown are home to two thirds of the world population. The results of the widening gap between the ‘haves (a lot)’ and the ‘not-haves’ are declining social trust and fragmentation, the destabilisation of societies and the undermining of social cohesion. On the other side of the spectrum, wealth and power are concentrated at the top of society, with wealth accumulation of the world’s billionaires accelerating to unprecedented levels.
A particularly instructive case to learn about the nexus of inequality and the power of polluting industries can be drawn from the 2022 ‘energy-’ and ‘cost of living crises’. The extraordinary profits of the fossil fuel industry in 2022 not only was a significant driver of inflation itself, they increased the income of the wealthiest, whereas people without assets in the fossil fuel industry lost a substantial part of their purchasing power, thus polluting industry profiteering exacerbating inflation inequality.