Environmental Taxes and Their Application
By: Fadia Al-Balawi
There is no doubt that the environment holds significant value in the perception of the Saudi legislator, as evidenced by the issuance of the new environmental system and national environmental initiatives. This underscores the importance of adopting progressive green policies that protect the environment while considering economic interests. However, green policies should not be limited to afforestation and a gradual shift towards alternative energy. There are other legislative solutions and green policies that can be implemented to mitigate climate change and reduce carbon emissions, such as environmental taxes (Green Taxes).
Introduction to the Green Economy:
The green economy is an economy that takes into account the interests of citizens and the environment simultaneously. It aims to strike a balance and create harmony between environmental protection, sustainability, and the continued wheel of economic development in the country. Some manufacturing and production processes result in environmental pollution, as does individual behavior. However, pollution is not an inevitable outcome, but rather its impact can be mitigated through successful environmental policies and government guidance of citizen behavior towards sustainability.
Environmental Taxes and Their Application:
One of the environmental policies adopted by some countries to mitigate and reduce pollution is environmental taxes. They are an excellent method for reducing environmental pollution while promoting sustainability without harming the economic interests of the country.
Environmental taxes can take various forms, including carbon taxes, fees on traffic congestion to reduce carbon emissions, and taxes on plastic bags, which are another form of environmental taxes.
What are Carbon Taxes?
Carbon taxes are levied on factories based on the amount of carbon emitted by each factory. They resemble electricity or water bills, with costs varying from one factory to another depending on their carbon consumption and emissions. For examples the tax on nitrogen oxide emissions in Sweden, which encourages factory owners to reduce carbon emissions to minimize losses and pay lower taxes.
Benefits of Environmental Taxes:
There are several advantages to environmental taxes. They promote sustainable practices among individuals and companies and help reduce pollution. Additionally, imposing taxes on fuels and petrochemical products aids in the gradual transition to an environmentally friendly economy supported by alternative energy sources. Furthermore, environmental taxes can generate additional income for the country, contributing to the enhancement of the local economy and providing governments with opportunities to finance public facilities such as public transportation buses, which also contribute to reducing environmental pollution.
Disadvantages of Implementing Environmental Taxes:
One of the significant problems is the flexibility and ambiguity in the application of environmental taxes. There are no clear and defined criteria for the environmental taxes, leading to significant variations in their implementation worldwide. Moreover, they increase production costs, thereby raising the prices of goods. Another problem is the difficulty of implementing such taxes in developing countries or those still recovering from economic crises or undergoing significant economic transformations. This makes the application of this type of tax challenging in the Kingdom of Saudi Arabia as well.
Applications of Environmental Taxes Around the World:
India: India has adopted the concept of environmental taxes and imposed them on plastic products, coal, chemical fertilizers, and chemical pesticides, in addition to imposing fees on traffic congestion.
Ukraine: Ukraine has implemented environmental taxes since 1999, imposing fines on environmental pollution caused by all associations and institutions, regardless of whether the pollution occurs once or is continuous, and whether the polluting act is legal or illegal.
Can Environmental Taxes Be Implemented in the Kingdom of Saudi Arabia?
From my perspective, the implementation of certain types of environmental taxes is possible, such as imposing fees on plastic bags or completely banning their use, or imposing fees on traffic congestion. In addition to other environmental fines that already take a place in the Kingdom. However, the specific implementation of carbon taxes, although desirable, faces various obstacles. These include the impact on the costs and prices of goods, the global economic crisis, and the Kingdom's desire to attract investors. These factors may prevent the implementation of this type of taxes, making it relatively challenging to apply in the Kingdom of Saudi Arabia.