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Environmental and green taxes

Tax policy makers, globally (for example OECD, EU) and domestically, are increasingly focusing on their members’ or countries’ contributions to environmental and green agendas. Tax measures that countries have implemented or are considering include: carbon taxes, green tax incentives, and carbon border adjustments. At the same time, companies are seeking to measure and reduce their carbon footprints, evaluate climate change risks, and communicate this information with investors, employees, customers, regulators or more widely.

As governments assess how taxes and incentives can be used to address climate change, CEOs and leaders need to reevaluate their strategies, risks, and business models. Supranational bodies are increasingly turning their attention to highlighting issues, setting standards or determining best practices in this area:

  • The OECD has long noted that pricing instruments encourage broad-based action to reduce environmental damage at least cost and should be a central pillar of green growth policy. Regular OECD reports on carbon pricing monitor countries’ carbon taxes and emissions trading schemes (latest report April 2021). .
  • The EU has consulted on some elements of a Green Deal that would strengthen some existing measures within the Single Market and protect it from competition due to carbon leakage with the introduction of a carbon border adjustment mechanism. Other measures might include a Member State national contribution calculated on the weight of non-recycled plastic packaging waste. 
  • The American Jobs Plan, incorporating the Made in America Tax Plan, published by the Biden administration includes tax incentives for clean energy.

Issues and challenges

While measurement and monitoring of Environmental, Social and Governance (ESG) metrics is becoming a more key issue for businesses, environmental and green tax policies will also be relevant in relation to:

  • Proactive engagement between policy makers, regulators and consumers
  • Compliance obligations and the interaction of subsidies, grants, taxes and other incentives; and
  • Wider sustainability strategies and investments.

How PwC can help:

  • Share economic analysis for use by or with policymakers
  • Monitor developments and alert stakeholders with impact assessments
  • Connect stakeholders such as by joining communities, roundtables or study groups (e.g., the Carbon Tax Study Group, which is monitoring and assessing current and proposed carbon pricing and green tax incentives in the US and EU)
  • Prepare briefings for taxpayers to share with stakeholders
  • Prepare strategies for reporting on tax as part of a wider business strategy, including as part of an Environment, Social, Governance (ESG) approach

 

Contact us

Edwin Visser

Edwin Visser

EMEA Tax Policy Leader, PwC Netherlands

Tel: +31 88 792 3611

Tomasz  Kassel

Tomasz Kassel

Partner, PwC Poland

Tel: +48 502 184 846

Niels Muller

Niels Muller

Tax partner, PwC Netherlands

Tel: +31 (0)88 792 60 51

Todd Metcalf

Todd Metcalf

Principal, Tax Policy Services, PwC United States

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