New carbon tax
Taxes are intrinsically linked to wider societal agendas. As taxes have a direct correlation with consumer / public spending, taxes can significantly impact economic trajectories, making taxes an effective strategy for countries to deploy. This paradigm has been the most discernible in the form of environmental initiatives, and over the past two years, we have seen an exponential growth in EU countries adopting Environmental, Social and Government (ESG) taxes into their own domestic frameworks.
The EU similarly has been adopting proposals that spawn multiple environmental benefits. This has primarily been motivated by ambitious climate goals set for 2030, following a wider need to address specific environmental concerns.
Effects to minimise the effect of climate warming emissions have come more sharply into focus because of these targets. To this effect, the EU has decided to introduce a carbon price on buildings and road transport fuels. Specifically, this will apply to petrol, diesel and heating fuels. To bolster their package, an additional 87 billion Euros has been set aside to support the extra costs placed on households, as well as promoting further investment in distinctly ‘greener’ mechanisms that can help facilitate climate change objectives.
Carbon pricing is expected to take a phased approach, commencing in 2027 and concluding in 2030, with prices expected to reach 45 Euros per carbon tonne emitted.
However, there are other considerations which may mean the legislation implementation is not so clear-cut. The proposals coincide with the current energy cost crisis- which has seen energy prices surge across much of Europe- and may meet with resistance in the current climate. This potentially will influence the inception date for the new carbon tax.
The EU Parliament and EU Member States are currently scheduled to vote on the issue in early 2024.
Kofax will closely monitor developments around the tax and consider its obligations around it.