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Премия рунета 2017

WWF: ENVIRONMENTAL TAX CANNOT SOLVE ENVIRONMENTAL ISSUES

15 august 2018
On August 13, the Ministry of Finance of the Russian Federation put up for public discussion a bill amending the Tax Code to effectively replace the existing system of payments for negative environmental impacts on the with an environmental tax.

The memo for the bill says: “the imposition of the environmental tax is substantiated by the need to finance the activities of the Government of the Russian Federation related to the implementation of the state environmental policy aimed at ensuring conditions for the exercise by citizens of their constitutional right to a favorable environment".

However, in its current form, the proposed bill primarily focuses on filling the federal coffers rather than on financing environmental measures and protecting the environment in general. In effect, the bill seeks to change the mechanisms for collecting payments for negative environmental impacts: it is proposed to collect the money by the Tax Service instead of the Federal Service for Supervision of Natural Resources. The bill can neither boost the budget revenues (as that is not the problem it is trying to address) nor can it help collect money for environmental measures.

Furthermore, according to the new bill, “negative environmental impacts resulting from activities financed from budgets of any level, will not be taxable.” This is positively inadmissible because from the environmental point of view such activities are no different from activities financed privately. Taking into account the amount of construction financed from budgets of different levels, this exemption may significantly reduce the amount of money collected for negative environmental impacts.

The Ministry of Finance has stated on numerous occasions that payments for negative environmental impacts are not used specifically for environmental protection purposes and while in the existing system for collecting these charges the money that gets collected is distributed among budgets of different levels proportionately, the new bill does not offer any money distribution mechanisms at all. Actually, regional and local governments would get zero compensation for negative environmental impacts.

"In its current form, the bill explains how money is to be collected but there is not a single word about who will be able to spend it and on what. Once the new environmental tax gets paid to the federal budget, the money will just disappear there," said Mikhail Babenko, Head of WWF Russia’s Green Economy Рrogram.

Speaking about the constitutional right to a favorable environment and the willingness of the Ministry of Finance to change the Tax Code, it should be noted that the existing system for collecting payments for negative environmental impacts as well as the system for (under-)financing environmental measures and environmental protection in general need to be radically revamped. The system of payments for negative environmental impacts should be aimed at reducing negative environmental impacts rather than at maximizing payments for them.  

"Money collected through payments for negative environmental impacts should compensate the damage resulting from such impacts, and, in essence, help to reclaim the environment. The system of interbudgetary transfers should also be transparent and logical with regards to the amount of financing allocated and the requirements to perform obligations to support the protected areas of Russia, protect endangered species, eliminate environmental damage and protect ecological systems that are valuable for the life and livelihood of people," Mikhail Babenko added.

In its current form, the proposed bill will not address any of the existing environmental issues or the problem of financing environmental activities. Furthermore, it will very likely significantly undermine the ability of regional and local governments to perform their environmental obligations.

For additional information please contact
Green economy programme director