Since the global financial crisis, policymakers around the globe have focused increasingly on financial sector taxes as a mechanism to generate revenue and improve social welfare. At the same time, a range of environmental policy measures, such as carbon pricing and fuel taxes, have been introduced. However, there has been little focus on ways to use these tax instruments to support sustainability objectives
This paper highlights the enormous potential that lies in mobilizing financial sector tax systems in the service of "greening" finance and the economy. Through three case studies on the greening of financial sector taxes, the report shows that adapting existing tax incentives to green financial sector taxes can make a critical contribution to achieving climate and broader sustainability goals.
It also focuses on three main ways to “green” certain types of financial sector taxes: implementation of a tax incentive on green saving schemes; adjustment of the bank levy on green/high-carbon assets; and introduction of a financial transaction tax (FTT) on high-carbon assets or exempting green assets from a FTT.