The green score card
The US tops the green tax index while India is ranked number 10
Governments around the world are focusing on taxes and penalties to reduce energy consumption of buildings, improve water efficiency and ensure sustainability of building materials. While the US tops the Green Tax Index, designed by KPMG, for its extensive programme of federal tax incentives for energy efficiency, renewable energy and green buildings, Japan is ranked second and scores even higher than the US on green tax penalties. India is at number 10 and is known for imposing fewer green tax penalties.
The KPMG Green Tax Index aims to encourage companies to explore the opportunities that green tax incentives present. A high ranking in the index indicates that the government is more active in using its tax system to drive sustainable business and achieve green policy objectives. It does not imply that a country is ‘greener’.
The UK is ranked third and its green tax approach is a balance between penalties and incentives. France occupies fourth place in the overall ranking with its green tax policy tilting more towards penalties than incentives. South Korea ranks fifth and China is at number six. The only countries in the index that impose fewer green tax penalties than the US or Canada are emerging economies such as Brazil, India, Mexico and Russia.
Australia ranks relatively high in the penalties index (sixth), largely due to its recently- introduced carbon price mechanism. However, it ranks lower (19th) in the incentives index, because the Australian government does not use tax incentives as widely to drive green corporate behaviour.
Germany and Finland rank higher in the penalties index (ninth and fourth respectively) than they do in the incentives index (17th and 21st respectively). While Germany focuses on energy efficiency, green vehicles and green buildings, Finland looks at green innovation and provides significant grant funding.