Ex'tax in Club of Rome Report

6 May 2015

The circular economy offers opportunities to boost jobs and tackle climate change, according to The Club of Rome. Their latest report on Sweden argues that a key set of policy measures could cut carbon emissions by 70% by 2030. A tax shift from labour to natural resource use is seen as one of the key policy measures. The number of additional jobs, the report states, would likely exceed 100,000 - cutting unemployment in Sweden by at least a quarter, maybe even half. 

From the (interim) report:

"In spite of the fact that numerous studies have shown the benefits of a tax shift – moving from taxing labour to resource use – modern tax systems in the EU apply high rates to employment while leaving the use of natural resources tax-free or even subsidized. In such a distorted business environment it is little wonder that most firms find it financially attractive to overuse natural capital and underuse human capital.

In a recent study “New Era. New Plan. Fiscal Reforms for an Inclusive, Circular Economy” (The Ex'Tax Project 2014) the point is made that in 2012, out of € 5 trillion in tax revenue in the EU member states, over 50% was derived from labour taxes and social contributions, almost 30% in consumption taxes and the remaining20% was based on capital. Only 6% of tax revenues consisted of environmental taxes (mainly on energy and transport as part of the consumption taxes).

To redress these obvious distortions will require actions at the level of the firm, the industry and the economy." (...)

"Of crucial importance will [...] be to rethink taxation. This policy area is not an EU competence at present. But the European Commission should be encouraged to take the lead and stimulate a process encouraging member-states to embark on a necessary tax shift." 

In the full version of the report, to be released in June/July 2015, the Dutch and Spanish economies will be examined as well.

 

In 1972, the Club of Rome published it's legendary report Limits to Growth focusing on the principle that unlimited growth cannot be sustained on a finite planet. Forty years later, the world is tracking closely to the Limits to Growth collapse scenario. Businesses and governments around the world are, however, embracing the principles of the circular economy, which may shift the global economy towards a more sustainable trajectory.

 
 

Club of Rome (April 2015) The Circular Economy and Benefits for Society Swedish Case Study Shows Jobs and Climate as Clear Winners. Anders Wijkman and Kristian Skånber.

Op-ed in The Guardian by one of the authors: Circular economy could bring 70 percent cut in carbon emissions by 2030.