Environmental Taxation in Asia and the Pacific

In the past, tax policies focused mainly on the economic aspect of taxation and tended to neglect the social and environmental dimensions. However, to contribute to the achievement of the Sustainable Development Goals (SDGs), the tax systems of the future will need to take the real cost of environmental and social impacts into account and so foster sustainable investment decisions. In the past, rapid rates of economic growth in much of the Asia and Pacific region were largely based on an unsustainable development model that externalized economic, environmental and social costs. Capital was allocated to fossil fuel based and resource and energy inefficient industries at the expense of greater investment in renewable energy, energy efficiency, sustainable public transportation, sustainable agriculture, ecosystem and biodiversity protection, and land and water conservation (UNEP, 2011, ESCAP et al. 2012). However, the costs of proceeding along the current resource intensive development path in a business-as-usual scenario are considerable and projected to rise over the coming decades, if corrective measures are not introduced. A particularly resource inefficient region, Asia-Pacific needs double the quantity of material resources as input to produce each dollar of GDP in comparison to the rest of the world, and is responsible for 32 per cent of the world’s economic output (ESCAP 2017). At the same time, fiscal space in developing countries in Asia and the Pacific is a challenge for Governments that need to pursue priority development issues. For these reasons, rethinking and recalibrating tax and public expenditure policies for sustainable development in the region is both necessary and helpful.

Sustainable Development Goals:

Industry, Innovation and Infrastructure

Reduced Inequalities

Sustainable Cities and Communities