The Climate Crisis is moving higher up on the agenda of decision-makers around the world. A huge amount of resources has been dedicated to green projects. However, far less emphasis has been put on tax policy opportunities. How could governments reform their taxation policies in a way that adheres to climate protection principles? Through tax policy tools, the price structure could be drastically changed, and serious incentives could be provided to change the behavior of the consumers and producers to achieve green policy goals. In light of this, why are we not talking about a green tax reform? This was the topic of our Tax Committee’s meeting on 7 December, where our guest was Csaba László, honorary professor at Corvinus University and former Minister of Finance.
If the current level of engagement in climate policy stays unchanged, climate goals will not be met, or only to a certain extent – said Mr. László. Taxation policies could be used to increase the burden of major CO2 producers such as the automotive and aviation industry, but governments around the world currently lack the willingness to begin such reforms. This is simply due to the fact that if other governments do not follow suit, their country’s competitiveness would take a very large hit – producers could simply move operations abroad. Thus, although green tax initiatives would definitely have the potential to correct the distortions of different climate-hurting activities, a large number of countries would need to sign up, including major economic powers such as the US and China. For this reason, Mr. László is skeptical about the chance of governments implementing green tax initiatives in the near future. Although the general attitude is changing worldwide, and in 10-20 years, green tax policies may be realistic, we may not be able to afford to wait so long.
We would like to extend our thanks to Mr. László for joining us and lending his expertise, Károly Radnai, Chair of the AmCham Tax Committee and Managing Partner at Andersen Hungary for moderating the discussion, and to the participating committee members for their valuable input.
The presentation of Csaba László is available here