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Tax as a force for good: Rebalancing our tax systems to support a global economy for the future

The Association of Chartered Certified Accountants (ACCA) in collaboration with thinktank, Ex'Tax Project published a new report “Tax as a Force for Good”, outlining how shifting tax burden from labour to natural resource use, pollution and consumption could help meet the goals of the Paris Climate Agreement, the UN Sustainable Development Goals (SDGs), and an inclusive circular economy.

This publication explores a proposed shift from labour taxes towards tax on resource and consumption, an area of reform of interest to the OECD, IMF, World Bank, EC, ILO, WBCSD and BSDC. 

Pascal Saint-Amans, Director of the Centre for Tax Policy and Administration at the OECD, notes that “…taxes have major potential as policy instruments to help curb greenhouse gas emissions, environmental pollution and biodiversity loss..”

ACCA and the Dutch Think Tank Ex'Tax Project identify five priorities for action for governments, including: 

1. putting a price on carbon; 

2. using tax revenues to reduce labour taxes and enhance social protection; 

3. incrementally increasing the rate and scope of taxes on pollution and resource use; 

4. engaging with companies and the public transparently and communicating the impact of such changes; and 

5. regional collaboration to achieve common environmental and social objectives.   

They further call for businesses to take action in four areas:  

1. evaluating the risks and opportunities related to global environmental and socio-economic megatrends; 

2. applying internal carbon and water pricing, monitoring external costs and benefits to start shifting business investment decisions to more inclusive, sustainable options; 

3. adapting the business’ governance, strategy-setting, risk management and performance measures to respond to risks and opportunities for viable new circular and inclusive business models; and 

4. pro-actively engaging with government in support of policies to promote circular business growth.  

Yen-Pei Chen, ACCA lead on this project, and CDSB Technical Working Group member notes that “disclosure of climate impacts in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) can help companies report decision-useful information and take action in the above areas”.  

The ACCA is encouraging stakeholders to respond to the questions at the end of the Tax as a Force for Good by emailing . They, together with Deloitte, are also holding a related debate in Brussels on 27 February.