Driving Towards Sustainability: NTO's Environmental Taxation Webinar Takeaways

On March 26th, 2024, the Network of Tax Organisations (NTO) hosted a webinar on “Implementing Environmental Taxes: Best Practice and Lessons Learnt.” The webinar represented a significant discourse in showcasing learned experiences on the implementation of environmental taxes. Ms. Tochukwu Onyemata of the West African Tax Administration Forum (WATAF) moderated it, and it comprised country case presentations from Norway and South Africa. 

For more information, including the agenda, please visit the event site.  

The concept of environmental taxation has increasingly gained traction in the late 20th century, particularly with rising concerns about environmental degradation, pollution, and resource depletion. This form of taxation has been perceived as a necessary augmentation to traditional regulatory approaches to tackle complex environmental challenges effectively. The Kyoto Protocol and the Paris Agreement have further emphasised the role of economic tools in combating climate change. Consequently, various nations have incorporated environmental taxes and other market-based instruments into their strategies for addressing the challenges arising from climate change and in pursuit of sustainable development, marking a paradigm shift towards recognising environmental considerations in economic decisions.  

Although the implementation of environmental taxes in different countries has varied, the overall aim is to align economic activities with sustainability goals, involving legislative frameworks, targeted taxation, emission-trading systems, incentives, and international cooperation.  

The primary focus of global debates on environmental taxation revolves around carbon dioxide (CO2) emissions, with only a fraction of global greenhouse gas emissions currently covered by explicit carbon pricing instruments. The insufficient coverage of energy-related carbon emissions and the challenge of internalising social costs through direct carbon prices, compounded by increasing fossil fuel subsidies, call for urgent carbon tax reforms. Moreover, environmental taxes extending beyond carbon also play a crucial role in the global transition towards sustainability. 

The NTO webinar aimed to facilitate the exchange of best practices and lessons learned in the implementation of environmental taxes. This event brought together experts and professionals from NTO member organisations’ tax authorities to discuss country-specific case studies and delve into the various aspects of environmental taxation. Presentations from Norway and South Africa were featured to explore how environmental taxes, including carbon taxes, harmonise economic activities with sustainability goals in different global contexts.

Norway's presentation provided insights into the country's use of CO2 taxes and road usage levies on fuel products. It highlighted the environmental rationale behind these taxes and the challenges faced, such as the relationship between CO2 tax and emission trading and the management of biofuels. Innovations like GPS-based road user charges were discussed to accommodate the increasing prevalence of electric vehicles.

South Africa's presentation began with an overview by the National Treasury on the pivotal role of environmental tax reforms and carbon pricing in steering the country towards a greener economy. It detailed how environmental taxes in South Africa aim to efficiently tackle environmental challenges while promoting sustainable practices. South Africa’s carbon tax policy, established after extensive stakeholder consultations and meticulous planning, was highlighted as a cornerstone in enforcing accountability and factoring in the true costs of greenhouse gas emissions into decision-making processes.

The South African Revenue Service (SARS) complemented this with a presentation on the administration of environmental taxes governed by the Customs and Excise Act of 1964. This presentation provided an overview of the seven environmental taxes and levies administered by SARS and delved into specifics like the CO2 levy on new motor vehicles, tyre levy, carbon fuel levy, and carbon tax. Additionally, it elaborated on compliance measures, highlighting South Africa's dedication to environmental conservation and fiscal responsibility. 

The webinar included a question-and-answer session and open discussion, allowing for a rich exchange of ideas and experiences among the participants.  In the closing remarks delivered by Ms. Onyemata of WATAF, she encapsulated the essence of the discussions and the ongoing commitment towards environmental taxation as a tool for sustainable development. 

In summary, the NTO webinar on environmental taxation was an important forum for learning and peer-exchange for tax administrations on the implementation of environmental taxes. It underscored the importance of these taxes in driving economic development that is in harmony with environmental preservation, thereby contributing to a global shift towards sustainability.