New era. New plan. TAX REFORM FOR AN INCLUSIVE, CIRCULAR ECONOMY

Femke Groothuis The Ex’tax Project www.ex-tax.com www.neweranewplan.com

How to align our tax code with inclusive circular growth?

Labour taxes: incentive to minimizepersoneel number of staff containers

Natural resource taxes low: unrestrained use

Partners

Interface® “The tax burden must be redistributed so as to lighten the burden on labour and increase the burden on the use of natural resources.”

European Commission (1993)

European Commission (1993) Growth, competitiveness and employment. Challenges and the ways forward into the 21th century. “a winning strategy“

European Commission (2015)

European Commisison (2015) Smart Taxation – a Winning Strategy. Video, https://www.youtube.com/watch?v=8kGgpaC6ID8

€ 5.4 trillion per year

European Commission (2016) Taxation Trends in the European Union | EU-28 total tax revenues 2014. EU labour taxes: 51% of tax revenues

PIT, SSC, payroll taxes

European Commission (2016) Taxation Trends in the European Union | EU-28 taxes on labour as % of total taxation 2014. EU additional labour potential (millions)

20.9 Unemployed 9.5 Underemployed part-time workers 8.8 Available to work (but did not look a job) 2.3 Looking for a job without (being able to start working within a short period) 41.5 Total

Eurostat (Accessed Oct 2017), Underemployment and potential additional labour force statistics 2016

Megatrends

EU ‘green’ taxes: 6% of tax revenues

European Commission (2016) Taxation Trends in the European Union | EU-28 environmental taxes as % of total taxation 2014. Weighted average. Tax on pollution, natural resources: 0.2%

European Commission (2016) Taxation Trends in the European Union | Environmental taxes as % of total taxation - Taxes on pollution and resources 2014 Global fossil fuel subsidies $ 325 billion per year

Double the value of renewable energy subsidies

IEA

IEA, World Energy Outlook 2016 | 2015 Linear economy Circular economy

What about robotization? Challenges (a.o.)

- Short-termism - Tax competition - International cooperation - Addressing multiple ‘wicked problems’

“environmentally related taxes can play an important role in growth-oriented tax reform by helping to shift part of the tax burden away from more distortive corporate and personal income taxes and social contributions.“

OECD

OECD (2011), Towards Green Growth. In practice

(a.o) - Sweden (1990) - Denmark (1993) - The Netherlands (1996) - Finland (1997) - Slovenia (1997) - Germany (1999, 2007) - UK (1996, 2001) - British Columbia - Canada (2008) - Colombia (2012)

Review of 186 model simulations

“on average, all predicted net job creation with significant CO2 reductions”

Aarhus University, Eunomia (2014) Study on Environmental Fiscal Reform Potential in 12 EU Member States. Ex’tax working group since 2011 2014

Partners in this research

2016

www.neweranewplan.com Methodology POLICY TOOLKIT SELECTED TAX BASES SCENARIO IN 2020

To help protect your privacy, PowerPoint has blocked automatic download of this picture. SCENARIO IN 2020 Overall results (EU-27, % difference from baseline)

*Final energy consumption of 12 energy sources (2016 Cambridge Econometrics) GDP

+ € 842 billion

2020, EU-27, compared to business as usual CARBON EMISSIONS

- 8.2%

2020, EU-27, compared to business as usual scenario ENERGY RESOURCES

- € 27.7 billion

2016-2020 EU-27 savings on energy import bill, twelve energy sources

WATER

- 218 billion m3

2016-2020, compared to business as usual scenario 6.6 million more people in employment

In* 2020,In EU2020-27, compared to business as usual. Impact per sector

(EU-27, 2020, % difference from baseline) (2016) Cambridge Econometrics Impact per sector + 6.6 miljoen

- 25.000

(EU-27, 2020, % difference from baseline) (2016) Cambridge Econometrics Real incomes in all groups increase (EU-27 average, 2020, % difference from baseline, socio-economic groups by type of activity)

Difference between 1st and 5th quintile: 0.12%

(2016) Cambridge Econometrics Integrated Value Added Statement

(EU-27, 2016-2020 compared to baseline) (2016) The Ex’tax Project (scenario & design), Cambridge Econometrics (macro-economic modelling), Trucost (Value Added Statement).

The Global Goals Carbon pricing on the rise

World Bank Group, Ecofys, (2016), Carbon Pricing Watch 2016. Pick n Pay Stores East Japan Railway Golden Arrow Neste Schneider Electric Borregaard Itau Unibanco Hess Owens Illinois The Spar Group JTEKT Indorama Ventures Total Vallourec Norsk Hydro Itausa Investimentos Occidental Petroleum Dow Chemical Tiger Brands Kawasaki Hengtong Group MOL Hochtief Arkhangelsk Pulp and Ecorodovias.. Bank of Montreal Mosaic Exxaro Resources Kokuyo KDDI Eni Danieli & C Paper Transportes Canadian Imperial Rogers Sasol LIXIL NTT Docomo Royal Dutch Shell Leonardo Acerinox Cavalinho Bank Communications Investec Mitsubishi True Corporation Vopak Finmeccanica Miquel Y Costas Colcafe Great-West Lifeco World Wide Nedbank Shimizu Electric Power Dev Aker BP Arcadis Boliden Group Tecniamsa Intria Items Technology Redefine Properties Sun Messe Osaka Gas Statoil Philips Lighting SSAB Alcoholes ..Uruguay Power Corporation of Capital Power Netcare Taisei Kansai Electric Power Galp Energia Royal BAM Group Tetra Pak Braskem Canada Hydro One Networks Group Five Toppan Printing Tokyo Electric Power PJSC Gazprom CTT Correios de Glencore Duratex Power Financial TransAlta Murray & Roberts Toto Korea District Heating Compañía Española Portugal LafargeHolcim Fibria Celulose Corporation Ameren Transnet Doosan Heavy Korea East-West de Petróleos Ferrovial Anglo American Enaex TD Bank American Electric Anglo American Industries Korea Electric Power Repsol Gamesa BHP Billiton Cementos Argos BNY Mellon Power Company, Platinum Korail Railroa. Korea South-East Lundin Petroleum Grupo Logista Hill & Smith CEMEX Goldman Sachs Avangrid AngloGold Ashanti LG JCDeceaux Premier Oil Consolidated Airlines Lonmin AES Tiete Energia Wells Fargo CMS Energy Arcelor Mittal South Global Brands Kering Tullow Oil OHL Marshalls Eletrobras World Bank Group DTE Energy Africa Manufacture Michelin BNP Paribas Prosegur Mondi COPEL Allergan Duke Energy Gold Fields APT Electronics Renault Credit Agricole SAS Petra Diamonds CEMIG Biogen Eversource Energy Harmony Gold Mining Faratronic Sodexo Gecina Mediterranean Rio Tinto CPFL Energia Dival Safety Exelon Impala Platinum Goodwell Bertelsmann Societe Generale Shipping Magyar Telekom Colbun Equipment FirstEnergy Kumba Iron Ore Henghao BMW Commerzbank SGS Royal KPN Empresa de Energia Air Canada Los Angeles PPC Longwell Daimler Piraeus Bank Pegasus Hava Euskaltel de Bogota Canadian National Department of Water Sibanye Gold Picotronics Puma >600Allied Irish Banks companiesTasimaciligi Swisscom Interconexion Railway and Power MTN Group T&W Volkswagen DNB ASA Balfour Beatty BT Group Electrica Inscape NiSource. Shaoguan Hongda Infosys Fiat Chrysler Banco de credito CNH Industrial TalkTalk Aimia Teknion NRG Energy Mahindra & Mahindra Tech Mahindra Mazzucconi, social Go-Ahead Group Vodafone Canadian Tire Corp Beck Group OGE Energy Sundram Fasteners Canon Fonderie Banco Popular Linklaters Verbund Freeze Brady Ormat Technologies Benesse Fujitsu Roechling Automotiveapply Espanol anMorgan Advanced internal Fortum Fruit of the Loom Covanta Energy PG&E Bridgestone Hirose Electric Iberica De Sus. Banco Santander Materials EDF General Motors Cummins Pinnacle West Futaba Industrial Hitachi Inditex CaixaBank Morgan Sindall Engie Hanesbrand Delta Air Lines Capital Mazda Motor NEC IKEA Berner Kantonalban Senior Plc Suez Superior Industries General Electric Public Service Nissan Motor Rohm Comp. Financière Credit Suisse Spirax-Sarco Veolia Walt Disney Harvard Maintenance Enterprise. Nittan Valve Daeduck Electronics Richemont Swisscarbon Re Engineering priceE.ON Archer Daniels Jacobs Engineering Sempra Energy Toyo Tire & Rubber Samsung Arcelik Zurich Insurance Stephenson Harwood EnBW Energie Campbell Soup Owens Corning SMUD Yamaha Motor AU Optronics Vestel Elektronik Group Travis Perkins A2A Cargill Parker-Hannifin WEC Energy Coway Darfon Electronics Crest Nicholson T.Garanti Bank. Atos ENEL Colgate Palmolive Stanley Black & Xcel Energy Hankook Tire Delta Electronics Domino's Pizza T.Sinai Kalkinma Sopra Steria ERG Dean Foods Decker Wesfarmers LG Electronics Taiwan Semi- Jaguar Land Rover Bank. SAP Hera Kellogg Tennant Company Woolworths KAO conductor Man. Liberty Global Turkiye Halk Bank. Methode Snam Mars United Continental Origin Energy Lawson Well Shin Technology Marks and Spencer Turkiye Kalkinma Sage Group Terna Philip Morris United Technologies Woodside Petroleum CJ Cheiljedang Zhen Ding Techn. Mindshare Bank. Sungard EDP International Waste Management AMP Pulmuone Delta Electronic N Brown Group Aviva Solvay REN WhiteWave Foods Wisconsin Energy GPT Essar Oil Ming Fai RELX Group Barclays Novozymes Acciona ARC Resources Conservation Insurance Australia PTT ACC Sky Ernst & Young UK Metsa Board Enagas Cenovus Energy Adobe Investa Office Fund Swire Pacific Ambuja Cements WPP Group Henderson Group Outokumpu Endesa Encana Alphabet National Australia Daito Trust Constr Dalmia Bharat Carlsberg Breweries Legal & General Stora Enso Gas Natural Enerplus Amphenol Bank Mizuho Financial Grp Gulshan Polyols Carrefour Investment Man. Air Liquide Iberdrola Husky Energy Autodesk Platinum Asset Nomura JSW Steel Danone Old Mutual Group Arkema Vattenfall Imperial Oil Corning Incorporated Management Sumitomo Mitsui Tata Chemicals So del S.p.A. Unite Students MMP Packetis Centrica Inter Pipeline Microchip Technology Stockland Trust Tata Steel Rixona Workspace Group MMP Premium National Grid Keyera Microsoft Westpac Banking Tokio Marine Denka Jerónimo Martins Lundbeck Aurubis Pennon MEG Energy Barrick Gold Fisher & Paykel Holdings Hitachi Chemical Arnest Novartis BASF Severn Trent Peyto Catalyst Paper Healthcare Ayala Land JSR Andres Serrano Centaur Guernsey D.G.W. SSE Seven Generations HudBay Minerals Aurizon Holdings KB Financial Group Mitsui Chemicals Coca-Cola Nuffield Health Edelmann United Utilities Energy Resolute Forest Cleanaway Waste Mindray Medical Sumitomo Chemical Nestlé Spire Healthcare Felix Schoeller Grupo Televisa Suncor Energy Products Management Alps Pharmaceutical Toyo In Migros Ticaret Palfinger HeidelbergCement Natura Cosmeticos TransCanada Teck Resources Incitec Pivot Astellas Pharma Ube Industries CDPAssociated (2017) British Putting Kingspan a price Groupon carbon. thyssenkrupp Integrating climateCarozzi risk North into businessVermilion planning Energy Cabot South32

Interface®

“Companies cannot do this alone. (…) when it comes to pricing carbon, companies’ internal carbon prices can only be sustained if that price materializes in the real economy, through policies that create a level playing field for all.”

Paul Polman (CEO Unilever)

Inclusive circular growth - Call to action - Showcases & research OECD

- Thought leadership Tax & the Global Goals - Regional research - Research on tax & equality - New economic analysis.

TAX: KEY ENABLER FOR INCLUSIVE CIRCULAR GROWTH

Femke Groothuis The Ex’tax Project www.ex-tax.com