Walter Stahel at the World Resource Forum in Davos (19-20 September 2011)

‘Eating people is wrong’ is a statement which most people will support and most will adhere to; ‘taxing renewable energies is wrong’ sounds equally right for most people.

Many governments subsidise such renewable resources as biomass, solar and wind energy. Yet human labour – work – is another renewable resource which, when intelligently used, has traditionally been taxed in most countries, but when wasted, is supported by social welfare.

A need for appropriate sustainable taxation

In a sustainable economy, taxes on renewable resources including work - human labour - are wrong and should be abandoned. The resulting loss of state revenue could be compensated by taxing the consumption of non-renewable resources in the form of materials and energies. Such a shift in taxation would promote low-carbon as well as low-resource solutions.

Changing the tax focus will by itself promote a more sustainable circular economy:

  • taxing non-renewable energies instead of labour will promote a circular regional economy instead of a linear global one, by penalising fuel-based transports by road, air and sea in favour of local and regional solutions.
  • taxing non-renewable materials instead of labour will promote the local reuse of goods, components and molecules and thus reinforce the competitiveness of these business models.

To summarise, a shift in taxation from renewable to non-renewable resources will reinforce the emerging trend towards a circular economy based on stock management instead of throughput, especially with regard to the material (physical) part of the economy. This trend is already fuelled by two independent developments:

  • Industrial economies are moving from scarcity to abundance.
  • The 2008 European waste directive has reconfirmed waste prevention as first priority, and has defined the re-use and service-life extension of goods (i.e. a circular economy for goods) as the main strategies to achieve waste prevention.
Economic optimisation thus changes to value preservation in addition to creating value added.