Experts call for ‘green taxation’ to achieve inclusive growth, SDGs

Islamabad: The costs of climate disruption and pollution are becoming clearer, which are passed on to society, individuals and future generations, rather than absorbed by the polluter. Therefore, there is a dire need of shifting the tax burden towards pollution and resource use, in order to help achieve Sustainable Development Goals (SDGs), inclusive growth and circular economy.

Experts stated this during a round table discussion titled “Tax as a force for good: Rebalancing our tax systems to support a global economy fit for the future”, jointly organized by Sustainable Development Policy Institute (SDPI) and Association of Chartered Certified Accountants (ACCA) here on Thursday at Islamabad.

Former Parliamentary Secretary for Climate Change Romina Khurshid Alam, said that the proposal of taxing the pollution and natural resource use and consumption should be considered by the incumbent government, as Pakistan is the most vulnerable country to the impact of climate change and environmental degradation. While acknowledging the already burden of taxes on the industries, she urges the government to revisit the taxation regime and rationalize the tax system.

Dr. Abid Qaiyum Suleri, Executive Director SDPI said growth can only be effective when it is environmentally sustainable. Considering the challenges of environmental degradation, population explosion and growing unemployment that societies are facing today, it is time to explore rebalancing our tax systems and use tax as a force for good, he added. Shifting tax burden from labour to natural resource use, pollution and consumption could help achieve the Sustainable Development Goals (SDGs) and an inclusive and circular economy, he remarked. He suggested that a mechanism should be developed in our tax system where polluters pay more taxes and more incentives for those industries who are the least polluter and take care of the environment.

Arif Masud Mirza, Regional Head of Policy ACCA said aligning our tax system with the circular economy and the SDGs would be a major challenge. He said there are more than a hundred ‘green tax’ options available to governments for applying the ‘polluter pays’ principle, including air pollution, energy, food production inputs, fossil fuels, metals and minerals, traffic, waste, and water etc. We need radical thinking in radical times to put this ‘green tax’ on the pollution, he added. He suggested the government to abolish fossil fuel subsidies and pricing carbon emissions. Also, tax revenues should be used to reduce taxes on labour and expand social protection, in particular addressing the needs of lower income households, he added.

Dr. Vaqar Ahmed, Joint Executive Director, SDPI said that green taxes have the potential to resolve dirty fuel, natural resources and water use. However, imposition of such taxes will require capacity building of parliamentarians who will enact law around these taxes. Similarly, capacity building intervention will be required for civil service involved in tax administration, he added. He said the parliament, federal and provincial tax authorities and private sector will have to collectively decide whether green taxes should be levied at the federal, provincial or local level. It is important that the private sector does not see green taxes as loss of competitiveness, rather as an intervention which can promote circular economy and in turn help sustainable Development Goals (SDGs), he remarked. This will also help private enterprises to envision how they can transition to business models that contribute social and environmental value.

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