Taking into account the worldwide agenda on climate mitigation through the gradual reduction of greenhouse gas (GHG) emissions and an increase in the share of renewable energy sources (RES), one should understand that all the actions to be taken for reaching the mentioned goal shall be provided with substantial amounts of money sources. Indeed, all the reforming that has a direct impact on the economic sectors undoubtedly leads to subsequent reforming of tax legislative basis and tax relations. Therefore, in order to achieve environmental benefits during the process of solving systematic environmental crisis [1, p. 31] lots of financial sources for investments shall be mobilized.
In our opinion, tax policy together with the present taxation system forms an instrument for reaching both fiscal consolidation tasks and the creation of favorable conditions for economic growth. Nevertheless, the list of functions of such phenomenon does not end with the mentioned two: we strongly believe that nowadays green taxes (as a part of any taxation system) can serve as instruments and mechanisms for reaching climate mitigation and adaptation goals.
In order to fulfill the requirements in the field of environmental protection it must be necessary to use the tools of tax policy. And since state regulation can be ensured by both power-coercive methods and economic methods, the levers of tax policy (such as tax benefits, tax credits, "tax holidays" and reductions in tax rates) shall be rational to use. Moreover, we already know the positive experience of several EU Member States that use tax policy to achieve the goals of climate mitigation and environmental protection generally. Here we can highlight the following examples: using of taxes designed to alter behavior such as carbon taxes or a plastic bag tax, as well as tax incentives for companies to behave in an environmentally responsible manner (for instance – enhanced depreciation allowances for companies that invest in energy-efficient equipment) [2, p. 4].
Talking about Ukraine in particular in the following context, we should mention that, in our opinion, one of the promising areas for the usage of tax levers for environmental purposes would undoubtedly be the field of green taxation.
In Ukraine, under the provisions of the Tax code of the country [3], there are basically two green taxes – environmental tax and carbon tax (taking into account, that carbon tax under the Ukrainian legislation is a component of environmental tax). As for these two taxes, in general, they were supposed to become a tool for influencing the activities of Ukrainian business entities to preserve the environment, minimize harmful effects, and encourage them to reduce environmental pollution levels. Nevertheless, for now, such taxes in Ukraine do not fulfill their compensatory and stimulating functions, and the business community perceives the increase in green taxes as an additional fiscal burden for them. While, at the same time, the amount of income from environmental and carbon taxes remains insignificant and insufficient to finance the necessary environmental protection measures. In addition to that, unfortunately, the constant change in the proportions of the allocation of funds from the payment of the environmental tax and carbon tax between state and local budgets and between special and general budget funds makes it impossible to form a consistent policy for environmental protection activities.
Therefore, in our opinion, it would be rational to reform the system of green taxation in Ukraine by improving mechanisms for spending funds from environmental and carbon tax payments and financing environmental protection measures. The main idea here would be to partially change the flow of funds accumulated in the form of green taxes payments to the direction of the special fund of the budget.
In addition, we strongly agree with the local experts from the Ministry for environmental protection and natural resources of Ukraine that it would also be rational to establish a few green funds in Ukraine as separate from the budget system legal entities, which would accumulate money from environmental and carbon tax payments or other payments for pollution [4], and then relocate such funds to the Ukrainian private entities that are ready to spend money on environmental modernization of their fixed assets. Therefore, this way it would be possible to fix the problem with the “diluting” of funds in the general state budget fund, as well as stimulate the transition to RES.
References:
1.Green finance as a trigger of sustainable development (2021). Reznikova N. V. The sustainable development goals: priorities for Ukraine. Materials of the All-Ukrainian Scientific and Practical Conference (Kyiv, November 6, 2021). The National University of Food Technology. Pp. 30—34.
2.Platform for tax good governance. Sustainable finance and tax. European Commission. Pp. 1—6. URL: https://taxation-customs.ec.europa.eu/system/files/2021-06/20210615_sustainable_finance_and_tax.pdf
3.Podatkovyi Kodeks Ukraiiny (2010): No 2755-VI vid 02 hrudnya 2010 roku (Tax Code of Ukraine). URL: https://zakon.rada.gov.ua/laws/show/2755-17#Text (in Ukrainian).
4.Improving environmental taxation and financing of the measures of environmental protection. Official website of the Ministry for environmental protection and natural resources of Ukraine. URL: https://mepr.gov.ua/files/%D0%95%D0%BA%D0%BE%D0%BF%D0%BE%D0%B4%D0%B
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