GFC: Green Fiscal Commission, funded by the Esmee Fairbairn Foundation.
The concept of a green tax shift is simple: taxes on the things that are valued by society; like jobs, incomes and profits; are reduced and the lost revenue is replaced by taxes on things society does not like, such as pollution and environmental degradation. ‘Pay as you burn, not pay as you earn’ as one political formulation has put it. This shift not only reduces pollution, but is a more economically efficient way of raising necessary tax revenues. Taxes on labour at their current level, for example, distort the economy and reduce its efficiency and output. The same considerations suggest that, at times when taxes need to be increased to stabilize the public finances, green taxes should play a more than proportionate role in the increase.