Chartered accountant Harris & Co reports that the UK is among the top three countries who are using tax as a tool to drive sustainable corporate behaviour and achieve green policy goals, according to research by KPMG.
The firm’s first KPMG Green Tax Index analyses green tax incentives and penalties in 21 major economies, focusing on key policy areas such as energy efficiency, water efficiency, carbon emissions, green innovation and green buildings.
The findings show that the US tops the list for using tax systems to respond to global challenges such as energy, security, waste and recycling, water and resource scarcity, pollution and climate change.
Japan comes second, with the UK in third place followed by France, South Korea and China. Last place goes to Russia, with Mexico and Argentina also well down the rankings.
Barbara Bell, head of KPMG’s environmental tax team in the UK, said: ‘Our analysis shows that at least 30 new green tax incentives, penalties or significant regulation changes have been introduced in the countries we studied since January 2011. A pro-active approach to green tax can help companies reduce the cost of strategic investments, drive innovation, improve efficiency and secure competitive advantage.’
The research indicates that the UK’s green tax approach is balanced between penalties and incentives, with the UK scoring most highly in the area of carbon and climate change.
In contrast, the US green tax policy favours an extensive programme of federal tax incentives for energy efficiency, renewable energy and green buildings, with fewer tax penalties than most other Western developed nations. If these incentives are stripped out, the US drops to 14 in the rankings.
Japan scores higher on green tax penalties than it does on incentives and also leads the ranking for tax measures to promote the use and manufacture of green vehicles.