Collab: Tomás Zambrano, Lawyer passionate about Public Law with a specialization in Tax, Environmental, and Administrative Law, with a Diploma in Environmental Law. Junior Associate in the Tax and Customs Law department at Rosso Alba & Rougès Law Firm.
At first glance, Tax Law, which is related to the payment of taxes to the state (such as taxes, fees, and contributions), might not seem directly relevant to environmental matters. However, in retrospect, we see the emergence of "Environmental Fees" (which are primarily enforced by provinces or municipalities), and also, as will be the subject of this article, the so-called "Carbon Dioxide Tax".
Before delving into it, it is important to define what a tax is? (The definition may vary depending on the doctrinaire consulted, but it is valid to refer to the definition in Article 2, Section c) of the Spanish General Tax Law (Law Number 58/2003)) a tax is a type of levy required without any direct compensation, where the taxable event consists of transactions, actions, or facts that reveal the taxpayer's economic capacity. In other words, typically, a tax requires an action (taxable event) that represents the economic capacity of the person performing it, for example: when we pay income or gross earnings taxes. Similarly, in Argentine legislation, taxes are required without any direct compensation (unlike a fee, which might be in return for a specific service, such as maintaining public lighting). This means that the sole fiscal purpose of a tax is to collect revenue.
Having discussed the above, in Tax Law, there is a phenomenon known as "parafiscalism" or "parafiscality" which, according to Jarach, refers to: parafiscalism encompasses levies in favor of the state or decentralized public entities with social or economic regulatory purposes (1) It is a phenomenon that occurs when a tax loses, or at least neglects, its primary purpose of revenue collection and instead serves another objective, such as mitigating environmental damage or regulating productive activities.
The "Carbon Dioxide Tax" is included in Law Number 23.966, Article 10, which was amended by Law number 27.430 (2018) and applies nationwide. Aiming to affect only one stage of its circulation, this CO2 tax applies to the products listed in Article 11 of the mentioned law, such as unleaded gasoline (up to 92 RON or higher), virgin gasoline, natural or pyrolysis gasoline, solvent, turpentine, gas oil, diesel oil, kerosene, fuel oil, petroleum coke, and mineral coal. It is important to note that, unlike VAT (IVA in Argentina) or income tax, which have percentage rates, this tax has a fixed amount that is updated quarterly according to the CPI (Consumer Price Index- Argentina)
The article also states: "The National Executive Power is authorized to increase the amounts of the tax mentioned in this article by up to twenty-five percent (25%) when advised by environmental and/or energy policies" Therefore, if the Executive Power (In Argentina) exercises this delegated authority, it must justify the increase based on environmental and/or energy policy reasons, and increases for other reasons, such as the 'emergency' typical of the known decrees (Decree of Necessity and Urgency), are not permissible.
But who are the taxpayers of this tax? (i.e., those who must pay it upon carrying out the taxable event). They are those who conduct the definitive importation, companies that refine, produce, process, manufacture, and/or obtain liquid fuels and/or other hydrocarbon derivatives in all their forms, either directly or through third parties, and those who are producers and/or processors of mineral coal. Likewise, Article 13 outlines scenarios in which the taxable event is considered perfected (i.e., when the anticipated conduct takes place). Some of these scenarios include: the delivery of the product, issuance of the invoice or equivalent act, whichever occurs first, or the withdrawal of the product for consumption, in the case of the fuels referred to, consumed by the person responsible for payment.
Finally, it is worth asking: Are these types of tools, which combine fiscal measures with environmental concerns, effective in reducing incentives for potentially polluting activities that cause environmental damage? The reality is that, in my view, these measures are essentially just a way for the state to collect revenue while claiming an altruistic cause, such as environmental protection. A nearly irrefutable example of this is that the Article following number 13 (in the Law) establishes exemptions to the tax we have been analyzing. For instance, the tax is exempt on transfers of taxed products intended for export. Why? Because, in this specific case, it is advantageous to encourage exports in order to collect export duties and thus raise a larger sum. If it were otherwise, meaning if parafiscality existed in Argentina, perhaps, and only perhaps, this tool would be effective and not merely a noble excuse for the state to expand its coffers.
Bibliography:
(1) Dino Jarach, Public Finance and Tax Law, Abeledo-Perrot Publishing, third edition, page 251. (Spanish: Dino Jarach, Finanzas Públicas y Derecho Tributario, Editorial Abeledo- Perrot, tercera edición, página 251)
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