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

Gianmarco Monsellato, EU Tax Public Policy Leader, made the welcome speech during an event co-organised by ACCA and Deloitte EU Policy Centre on « Tax as a force for good: rebalancing our tax systems to support a global economy fit for the future ».

The event gathered more than 100 persons: both speakers and attendees were comprised of representatives from the EU institutions, business associations, tax & accounting profession, Corporates…

The discussions were quite lively and constructive on how shifting tax 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.

Tax is only one of the available policy instruments to promote the shift to a green economy

Tax is only one of the available policy instruments among a range of different policy options to halt the pace of climate change (see notably the recent Commission proposed a communication on sustainable Europe by 2030, and the ‘Tax as a Force for Good’ paper published by the ACCA).

The need for a tax system that is fit for the 21st century

Tax is generally considered as the most appropriate policy instrument with respect to one of the main challenges of our time, Climate change and the transition towards a cleaner energy, which are a priority in the political agenda. Gianmarco Monsellato reminded that many European countries are facing a public rejection of the green agenda because people refuse to pay more taxes, even for the green economy. He highlighted that the green economy should not be downgraded to a new basis for raising tax revenue. Tax systems are for the time being unbalanced, taxing too much labour. A consensus emerged among the speakers on the need to adapt the international tax system to this challenge and broadly to the 21st century challenges (globalisation, digitisation, climate disruption, pollution, water scarcity, waste, unemployment and underemployment). “There are more than 100 options available to governments to actually shift the tax burden, ranging from putting a price on air pollution such as Carbon emissions, to water use, waste and the extraction of materials” (Femke Groothuis, President & Wavemaker, The Ex’tax Project).

Changing the decision-making for EU taxation policy

While Dr Andreas Strub (Head of Unit) mentioned that it can be difficult to find a uniform one size fits all solution, which is acceptable to several countries, Heidi Hautala (MEP and Vice-President of the European Parliament) called EU Member States to “give a little bit of competence to the EU in the area of taxation” to ease this transformation of the EU tax system (making a reference to the proposition of the EU Commission to move from unanimity to qualified majority voting for direct tax matters). Both emphasised that the EU is the perfect place to discuss how this transition can look like and be at the forefront of said transition.

A neutral tax is a powerful policy tool

Tax can be a force for good. “The best way to use tax to promote the shift to a green economy is to have an efficient tax system that provides funding for public policies defined as a force of good: neutral tax is a powerful policy tool!” according to Gianmarco Monsellato. Tax, however, remains a very technical subject. The challenge is therefore to make sure that the level of information is sufficient in order to make proper policy decisions, notably by carrying out the necessary research and fact finding to collect the data on which policy makers will be able to take the appropriate decisions.

For more details read the event report and watch the video with the event’s highlights.

Gianmarco Monsellato

Gianmarco Monsellato, French tax attorney, was the CEO of Taj from 2004 to 2016. He is Deloitte Global Tax & Legal Leader for Client & Markets. He is a member […]

Grégory Jullien

Gregory Jullien, fully qualified French lawyer, is a tax manager of Deloitte Luxembourg who has joined the Deloitte EU Policy Centre in Brussels in 2018 to work on tax policy […]