What are the instrumental roles of the introduction of environmental tax in the realisation of the polluter-pays principle in Ethiopia?

• Published date: 14 December 2017
• Author: Gebregiorgs, M.T.
• Citation: (2016) 22 SAJELP 3
• Date: 14 December 2017
• Pages: 3-43

3

WHAT ARE THE INSTRUMENTAL

ROLES OF THE INTRODUCTION

OF ENVIRONMENTAL TAX IN THE

REALISATION OF THE POLLUTER-PAYS

PRINCIPLE IN ETHIOPIA?*

M.T. Gebregiorgs†

This research examines the instrumental roles of the introduction of

environmental tax in the realisation of the polluter-pays principle under

the federal jurisdiction of Ethiopia. It is a single country case-oriented

comparative research design, and data triangulation is the method used

to establish its validity. It first shows the recognition of polluter-pays as

a principle, rule and policy to reach the idea of sustainable development.

Secondly, it verifies the degradation/pollution-based redistributive,

preventive and curative functions of the polluter-pays principle. Thirdly, it

indicates the variations of the threshold-bound distributive and incentive

bases of environmental tax according to the functions of the polluter-pays

principle. Fourthly, it demonstrates the instrumental roles of: (1) Municipal

and treated hazardous solid wastes, sludge, and sewer charges in covering

the cost of their collection, transportation, treatment and disposal; (2)

Effluent charges in restoring authorised water resources degradation; (3)

Carbon tax and cap-and-trade in restoring authorised air degradation; (4)

Consumption taxes in reinforcing an environmentally friendly pattern of

consumption; (5) Royalties in encouraging rational use of scarce natural

resources. Finally, it implies that the polluter-pays principle is contingent

on setting up a range of legally viable and administratively feasible

environmental taxes.

* This research is conducted under the affiliation of Tilburg Law School,

Tilburg University, Tilburg, The Netherlands; and Mekelle University School

of Law, Mekelle, Ethiopia; under the supervision of Professor Dr Jonathan

Verschuuren.

† PhD Researcher in the Faculty of Law, Tilburg University, the

Netherlands, Email: M.T.Gebregiorgs@tilburguniversity.edu. LL.B, M.A. in

Environment and Development, Lecturer in Mekelle University, School of

Law.

(2016) 22 SAJELP 3

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4 SOUTH AFRICAN JOURNAL OF ENVIRONMENTAL LAW AND

POLICY

1 INTRODUCTION

1.1 Background of the research

The judicious use of natural resources is a prerequisite for

sustainable development,1 and green tax reform is a key framework

and critical tool of sustainable development.2 Concomitantly, the

polluter-pays principle is one of the main outlines of sustainable

development,3 that guides the actions of public authorities,4 and it

is a framework where environmental protection and environmental

taxation meet.5

At the same time, the judicious use of natural resources is

to a substantial degree determined by a tax structure and a tax

constitution that stimulates a judicious use of natural resources.

And environmental protection is an important step toward

achieving sustainable development.6

Price-based instruments were first suggested by Pigou in 1920

in the form of taxes and subsidies to deal with detrimental and

beneficial environmental externalities.7 Subsequently, the Rio

Declaration of 1992 endorsed the internalisation of environmental

1 Juergen G Bachaus ‘Increasing the role of environmental taxes and

charges as a policy instrument in developing countries: Some conceptual

considerations’ (2004) American Journal of Economics and Sociology 63(5)

1097.

2 OECD Environmentally Related Taxes in OECD Countries: Issues and

Strategies (2001) 3; UN General Assembly Draft Resolution A/66/L.65, The

Future We Want, 24 July 2012.

3 John Snape and Jeremy de Souza Environmental Taxation Law: Policy,

Contexts and Practice (2006) 111; OECD Council Recommendation on the

Use of Economic Instruments in Environmental Policy (1991) C (90) (Final)

2.3, 177.

4 Nicolas De Sadeleer Environmental Principles from Political Slogan to

Legal Rules (2002) 311.

5 Federica Pitrone Environmental Taxation: A Legal Perspective (PhD

Dissertation, Universita Luiss Guido Carli, 2013/2014) 130.

6 Bachaus (n1) at 1097; The International Bank for Reconstruction and

Development (IBRD)/The World Bank (WB) Environmental Fiscal Reform

What Should be Done and How to Achieve It (2005) 17; Katri Kosonen

‘Regressivity of environmental taxation: Myth or reality?’ (2012) 1; OECD

Environmental Fiscal Reform for Poverty Reduction (2005) 12.

7 M N Murty ‘Market based instruments for pollution abatement in India’

in Pushpam Kumar (ed) Economics of Environment and Development (2005)

130.

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costs and the use of economic instruments based on the polluter-

pays principle.8

Similarly, OECD has verified that the implementation of

environmental taxes is contingent on their compliance with

the polluter-pays principle.9 De Sadeleer and De Lucia also

confirmed the interdependence of the polluter-pays principle and

environmental tax.10

Conversely, parallel to the unique policy, regulatory and institutional

frameworks of states,11 there is no single blueprint for sustainable

development,12 the polluter-pays principle13 and environmental tax14

that squarely applies across the board of all jurisdictions.15

8 UN ‘Rio declaration on environment and development’ (1992) Principle

16, available at www.un.org/documents/ga/conf151/aconf15126-1annex1.htm,

accessed on 8 June 2016; See also OECD Council Recommendation on Guiding

Principles Concerning International Economic Aspects of Environmental

Policies (1972) C(72)128 (Final), A(4); UN ‘Agenda 21’ (1992) 2.14(c) and

4.24, https://sustainabledevelopment.un.org/content/documents/Agenda21.pdf

accessed on 8 June 2016; UN ‘Framework convention on climate change (1992)

Article 2, https://unfccc.int/resource/docs/convkp/conveng.pdf, accessed on 8

June 2016; UN ‘Convention on biological diversity’ (1992) Article 11, available

at https://www.cbd.int/doc/legal/cbd-en.pdf, accessed on 8 June 2016; Ethiopia

Biological Diversity Convention Ratification Proclamation (EBDCRP), no

98/1994, Negarit Gazeta (Neg. Gaz.), 53rd Year, no 88; UN ‘Report of the world

summit on sustainable development’ (2002) 19(b) and 26(b).

9 OECD (n3) at 177.

10 De Sadeleer (n4) at 44 and 46; Vito De Lucia ‘Polluter pays principle’

(2010) at 2, available at www.colorado.edu/AmStudies/lewis/ecology/

polluterpays.pdf, accessed on 8 June 2016.

11 Agenda 21 (n8) at 4.2.5; IBRD/WB (n6) at 3, 41 and 53; UNEP The

Use of Economic Instruments in Environmental Policy: Opportunities and

Challenges (2004) 4.

12 World Commission on Environment and Development (WCED) ‘Our

common future’ (1987) at 39, available at www.un-documents.net/our-

common-future.pdf, accessed on 8 June 2016.

13 Philippe Sands et al Principles of International Environmental Law 3 ed

(2012) 228; De Sadeleer (n4) at 305. ‘The polluter-pays principle juxtaposes

two terms whose meanings appear self-evident at the first glance but become

elusive as one attempts to define them.’ De Sadeleer (n4) at 305 and 37.

14 UNEP (n11) at 12.

15 James Alm and H Spencer Banzhaf ‘Designing economic instruments for

the environment in a decentralized fiscal system’ (2012) Journal of Economic

Surveys 26(2) 197; Stefan Speck ‘Options for promoting environmental fiscal

reform in EC Development Cooperation, Country Report Uganda’ (2010) 1.

THE INTRODUCTION OF ENVIRONMENTAL TAX IN ETHIOPIA 5

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