Green tax shift

A green tax shift is a fiscal policy which lowers the taxes on income including wages and profit, and raises taxes on consumption, particularly the unsustainable consumption of non-renewable resources.

Examples of taxes to be lowered by a green tax shift:

• payroll and income taxes.

Examples of taxes to be implemented or increased:

• Carbon taxes on the use of fossil fuels;
• Taxes on the extraction of mineral, energy, and forestry products;
• Licence fees for fishing and hunting;
• Specific taxes on technologies and products which are associated with substantial negative externalities;
• Garbage disposal taxes;
• Taxes on effluents, emissions and other hazardous wastes.

Tax shifting may include balancing taxation levels to be revenue-neutral for government, industry or consumer groups.

Taxes on consumption may take the feebate approach advocated by Amory Lovins in which additional fees on less sustainable products -- such as sport utility vehicles -- are pooled to fund rebates on more sustainable alternatives -- such as hybrid electric vehicles.

The object of a green tax shift is often to implement a "full cost accounting", using fiscal policy to internalize market distorting externalities, which leads to higher efficiency, and sustainable wealth creation.

The policy has been criticised as being neo-liberal for moving the tax burden from the rich to the poor by reducing progressive income tax which emphasise ability to pay and thus tax the rich at a higher rate than the poor, in favour of regressive consumption taxes which tax the rich and poor at an equal rate.