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Circular shift needn’t be taxing

In the first in a new series of articles discussing the taxation systems best suited to promoting the circular economy KPMG is calling for fresh thinking.

Writing in a company blog, the Head of Tax at KPMG Luxembourg, Georges Block, said the tax system as it stands doesn’t support the growth of a circular economy. He insists “incentives should be put into place” and that “an appropriate tax policy can provide such incentives.”

The tax chief acknowledges wholesale changes won’t happen overnight but he argues that incremental steps can provide the catalyst for sharper growth in the circular economy.

Georges references some of the suggestions typically put forward by academics and politicians, such as making changes to VAT to “influence behaviour” the idea being that “lower VAT on labour-intensive services incentivises repairs and reduces waste”; or increasing the “tax on emissions and technical material consumption: such a higher tax reduces the consumption of non-renewable resources”.

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