Higher Energy Taxes Will Economies and Cut Income Taxes

August 1, 2014 International Tax Cooperation

WASHINGTON D.C. – Taxing fuel and other energy sources could hep governments boost economic growth and cut taxes, without reducing overall tax collections levels.

Taxes on incomes, labour and profits around the world could be reduced if governments place a heavier emphasis on taxing energy, a move which would have the added benefit of adjusting energy prices to point where they more accurately reflect the true impacts that energy use has on the environment, according to a new report issued on July 31st by the International Monetary Fund.

Levying higher environmental and energy taxes will allow governments to reduce taxes which are regarded as being detrimental to economic expansion, allowing countries to maintain comparable levels of tax revenue collections while simultaneously encouraging growth.

According to the experts of the IMF, the most efficient way to shift the focus of taxation onto energy taxes is to expand the fuel taxes systems already implemented in most countries to cover “other fossil fuel products, such as coal and natural gas, or their emissions, and aligning the rates of these taxes with environmental damage.”

Levying higher rates on fossil fuels will also have the secondary benefits of protecting the environment while spurning greater innovation and technological development.

Photo By: Oran Viriyincy