Ministers discussed tax policy and climate change
The challenge of climate change is at the heart of the 2021 G20 agenda, focusing on People, Planet and Prosperity. Climate change is a major threat to our people. Urgent, collective action is required to cut greenhouse gas emissions with the goal of reaching carbon-neutrality by mid-century.
The G20 High Level Tax Symposium on Tax Policy and Climate Change took place in Venice on July 9, ahead of the G20 Finance Ministers and Central Bank Governors’ meeting on 9-10 July and of the Venice International Conference on Climate on 11 July. This event provided a unique opportunity for Finance Ministers of G20 countries to discuss the role that tax policy can play in supporting and promoting transitions towards a greener and more sustainable economy.
Ministers reaffirmed that reaching the common goal of net-zero emissions by mid-century is a priority, and that tax policy can help to achieve this objective in an effective and inclusive manner. They recognized that countries may rely on a mix of policy instruments to reduce greenhouse gas emissions and may achieve their climate objectives with different speed and trajectories, taking into account national specificities, differing degrees of technological development, different availability of resources needed to finance the green transition. At the same time, Ministers acknowledged the importance of enhanced international cooperation to avoid potential spillovers stemming from unilateral approaches.
In two sessions, moderated by the IMF Deputy Managing Director and the OECD Secretary-General respectively, Ministers presented their views, experiences and proposals on how to use fiscal tools to serve ambitious climate change mitigation strategies. They also discussed ways to limit the impact of climate policies on vulnerable households and tackle carbon leakage in order to avoid adverse effects on international trade and growth agendas.
The Italian Presidency has asked the IMF and the OECD to prepare a report on this subject ahead of the G20 Finance Ministers and Central Bank Governors’ meeting in October 2021. Building on the outcome of the Symposium, the report will take stock of countries’ mitigation and adaptation policy strategies.
Daniele Franco, Italy’s Minister of Economy and Finance, stressed that a multilateral approach to tax policy and climate change is key to address successfully this truly global challenge. All participants agreed that this dialogue should be continued and conducted at both the political level – through consistent engagement of G20 Finance Ministers and Central Bank Governors – and at the technical level, possibly through a G20 study group.