Teoría de la Coherencia Central

This chapter has identified a range of relevant methods of influencing human behaviour through both tax methods and supporting measures. A variety of interdisciplinary evidence

122 See chapter 3, n.20 at 12, para. 24.

123 The decision has been controversial even within the Government, with some arguing that the impact of the recession means the highest rates should be scrapped: ‘Government challenged over tax rise for big cars’ The Times 27/5/2008 <http://www.timesonline.co.uk/tol/news/politics/article4009690.ece> Accessed 28/4/2010.

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and academic discussion has been analysed throughout to support and explain the

conclusions, learning from the mistakes and experiences of previous policies. Such findings are of essential importance to policymakers in deciding appropriate means of influencing consumption choices and environmental behaviour.

The findings point to interesting trends in human decision-making which can determine the potential success of a tax method. A recurring feature stressed the importance of supporting the introduction of any tax or incentive package with a wider campaign of education, public information, a convincing explanation of the science and the purpose of the package, and in leading by example. Education included ensuring that decisions could be made with an understanding of the full private and social costs of the choice. Kosonen and Nicodème have attempted to identify when it is appropriate to use instruments to complement tax measures, and establish the kind of instrument to use, as the following flowchart demonstrates:¹²⁴

124 Kosonen K and Nicodème G, ‘The Role of Fiscal Instruments in Environmental Policy’ in Taxation Papers (Luxembourg: Office for Official Publications of the EC, 2009) at 13.

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As people do not react well to feeling forced into making a decision, it was found to be important that choices remained within the market – but that pricing policies could be utilised

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to ensure that the ‘best option’ would be the option endorsed through the tax code. This could be done via taxes and subsidies. Equally it was found that people react well to

consumption choices with positive status attached to them, as well as to consumption choices promoted with upmarket rather than ‘cheap’ images, and that these human anomalies could be taken advantage of in order to promote sustainable consumption choices and

environmental behaviour. This can change people’s perceptions from thinking they are making a sacrifice to thinking they were making an improvement.

It was found that people wanted to be rewarded for changing their environmental behaviour rather than simply paying more if they did not, and even small incentives could satisfy this demand. This is in line with the theme which promotes the concept of rewarding improvers and ensuring the polluter pays. As political resistance could hinder the effectiveness of a tax package, it was thought to be important to design a tax model which the public would not oppose. Fairness and equity in the tax system were found to be fundamental expectations of the public. This involved providing certainty of the system, such as whether taxes would continue to rise, so that people would be certain of the need to adapt behaviour and make their choices accordingly. For this to happen, it was found that legal uncertainty and retrospective application could undermine confidence in the system.

Whilst sending the intended message of behavioural change to the market in a personalised and reasoned manner, it was found also to be vital that real alternatives were available, to avoid simply penalising people for making a decision when they have no other choice.

Therefore it was found that market-based incentives must be supported by investment in

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infrastructure - whether private or public– to offer real alternatives so that a person can either alter his behaviour or bear a greater financial burden.

With such findings, policymakers can make an informed decision as to the type of tax package to introduce to have the desired effect upon decisions towards the environment.

What this chapter does not answer however is how the policymaker should decide which parties are to be charged to tax or offered incentives to change their behaviour. To do this, the policymaker needs to decide:

(a) Who ought to bear the burden of environmental taxation; and subsequently, (b) How to target those parties intended to be taxed or offered incentives.

This Part will deal with these questions, not in offering policy solutions but in offering the policymaker informed choices as to the outcomes of potential decisions. Chapter 7 will look at how a policymaker can decide upon the parties to include in their environmental fiscal reform, considering questions such as how the burden of tax can be shared without

aggravating poverty issues or causing unforeseen consequences. Chapter 9 then analyses tax methods to target taxes in the most efficient manner, again to provide the policymaker with an educated choice as to tax policy options available.

136 35.1.1 Criticisms of Beneficiary Pays Doctrine ... 142 35.1.1.1 General Taxation and Victim Pays ... 142 35.1.1.2 Uncertain Beneficiaries ... 144 35.2 POLLUTER PAYS PRINCIPLE ... 145 36. METHODS ... 146 36.1 INTRODUCTION ... 146 36.2 CONSUMPTION TAXES AND USER CHARGES ... 147 36.3 BROAD TAX BASE:CONSUMPTION ... 148 36.4 DISTRIBUTIONAL IMPACT ... 149 36.5 BUSINESS EXEMPTIONS ... 150 36.5.1 Tax design ... 150 36.5.2 Conclusion ... 152 36.6 ELASTICITY CONSIDERATIONS AND INCIDENCE... 153 36.7 SUBSIDIES ... 154 36.8.3 Choice of Taxable Part of Production Process ... 159 36.9 WIDER POLICY ISSUES ... 160 36.9.4.2 Level of Sacrifices of Low Income Groups ... 165 36.9.4.3 Overcompensation and the Poverty Trap ... 166 36.9.4.4 Counter-productive measures: Exacerbating Poverty ... 166 36.9.4.5 Counter-productive measures: Over-burdening the employed ... 168 36.10 ADMINISTRATION AND COMPLIANCE COSTS ... 168 36.10.1 Introduction ... 168 36.10.2 Distribution of Compliance costs ... 169 36.10.3 Legal Certainty ... 170 36.10.4 Utilising the existing Tax Code ... 171 36.11 FOREIGN INCOME ... 173 36.11.1 Introduction ... 173

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36.11.2 Export tax ... 173 36.11.3 Border Tax Adjustments ... 174 36.11.4 Transportation tax advantages ... 175 37. CONCLUSION ... 176