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Abstract
This research developed a corporate tax framework that delivers sustainable economic and environmental outcomes. Companies that sustainably improve their use of environmental resources receive a benefit in the form of a tax offset.
The thesis is positioned within the sustainability and environmental policy contexts. The research highlighted a gap in models or frameworks that link environmental sustainability and corporate outcomes with tax policy. Determining how the company income tax system can facilitate sustainable business practices requires an understanding of incentives as drivers of behavioural change as well as business attitudes and approaches to environmental issues and environmental tax policy. This background analysis and literature review provides the structure for the framework – how a taxation system is designed is critical for its effectiveness.
The methodology is based on the concept of sustainable development and how it is measured. Given the broadness and complexity of this topic, multi-criteria analysis is used to determine which indicators are to be analysed as viable measures for the framework. The Footprint was selected as the measure of changes in corporate sustainability.
A broad outline of the concept is that, as a company becomes more sustainable, its average marginal tax rate decreases. This is achieved by linking the Footprint with the statutory tax rate. The scope of the thesis is restricted to developing the framework and the operation of the tax offset. Determining the Footprint measure and the Footprint rate will be the subject of further research.
As an incentivised system, it has the potential to considerably increase R&D spending and investment in sustainable technologies and improve the efficiency of business processes without compromising revenue. It is structured so as to avert the trade-offs and/or conflicts normally associated with injecting environmental concerns into fiscal policies. It does this by aligning economic and environmental goals with drivers of corporate decision-making.
The framework is transparent and broad-based, able to be applied broadly across and within all industry sectors. Being a tax-offset, adoption will be voluntary thereby minimising any resource allocation bias and compliance costs. It also facilitates accountability with respect to the sustainable use of resources.