The COP-21, also called Paris Agreement on Climate Changei s now officially ratified

enters into force on November 4, 2016. The U.N website announces that: “The Paris Agreement will enter into force thirty days after the date on which at least 55 Parties to the Convention, accounting for at least an estimated 55% of the total global greenhouse gas emissions have deposited their instruments of ratification, approval or accession with the Depositary.” Among other major nations, the United States, Mexico, China, Brazil, India and the European Union have ratified the Treaty. As it is known, the Convention does not require the parties to follow a specific strategy to achieve mitigation of greenhouse gas emissions by each country, although the progress must be measured and multiple accounting prevented. However, at global political level, putting a price or tax on carbon emissions is a commonly accepted path to implement the environmental

EThis week, Canada announced a national carbon tax plan. Prime Minister Justin Trudeau announced a national carbon tax, starting from C$10 ($8) per ton in 2018 and reaching C$50 by 2022. The “National News” writes [1] : “In moving to strengthen the national policy on climate change, the government had to contend the fact that some provinces have already set carbon prices on their own. The government needed a scheme that would encompass those systems while pushing other provinces to catch up. So the prime minister offered a choice: Follow your own approach, as long as it cuts emission as deeply as the new national tax, or let the federal government collect the levy and send you the proceeds. This accomplishes several things: It tells the world that Canada wants to meet its commitments. It was announced that even an economy dependent on energy extraction may impose a carbon tax. Best of all, it shows that a carbon tax does not need to be a grab for additional fiscal resources: The policy can be revenue-neutral. ”

Facing these events, we can remember, at CIAT, that our mission is tax administration, not tax policy; however initiatives are multiplied countries to implement the promises contained in the Climate convention, and more fundamentally to conserve our planet with a sustainable climate.

Climate change has enormous economic effects, difficult to account but we are beginning to estimate these effects in economic and financial terms.

For example, the risks of disruption of the food chain of a state because of exceptional weather events are increasing, as well as the probability of catastrophic hurricanes. These phenomena affect undoubtedly the state revenue collection in the affected areas. Do the tax administrations of Latin America have contingency plans for such emergencies? To give an example, the tax administration of Neo-Zealand has developed internal regulations suspending or adjusting fiscal policies in areas affected by an earthquake.

“”At the current time, any international business group, or any state that elaborate development plans or business plans and does not assess the impact of climate change, lives on another planet.” According to Forbes [2] , the climate risks affect the whole market, can come from unexpected directions, including storm damage and coastal flooding, and companies outside the energy sector may be less prepared to evaluate these effects… “The first step is to recognize the possibility that there are a risks, and opportunities and then develop them into a process, do an assessment to figure out what it means.”

Disruptions in economic activities caused by climate change can have a significant impact on the revenues of the tax administrations. For example, if the activities of viticulture in the Southern Cone or coffee crops in the tropical region have to change the height level of their plantations due to climate change, we must anticipate disruptions in income related to these sectors. And what about evaluating the fiscal impact for each country resulting from the global transition from fossil fuels to renewable energy?

In the last two months, CIAT has participated in events environmental tax reform: The 24 and 25 August 2016, in Guatemala, Mr. Marcio Verdi, Executive Secretary of CIAT, participated the forum-workshop organized by the German cooperation GIZ and ECLAC, “Exchange of experiences and perspectives on environmental taxation in Salvador and Guatemala”.

In Panama, the last week of September, I was able to attend the LEDS LAC workshop, “Moving towards a resilient development and low emissions: implementing the agreement of Paris” [3] , which was organized jointly with the Latin American Carbon Forum 2016 (FFLAC) providing space for government officials, international organizations, NGOs and other stakeholders … to share experiences and best practices, identify common challenges, strengthen capacities and establish collaborative links.

The implementation of development plans and climate mitigation in each state requires a partnership between the public and private sectors, and particularly between Environment, Energy, Health and Finances. But the development of environmental public finances policies and financial mitigation of the climate risks require capacity building within the tax administrations; an aspect where CIAT cannot forget. The potential effects of climate change on public revenue administration are too important to be ignored.

[1] Bloomberg News, Editorial board: National carbon tax, a model that should be widely copied around the world, National post, October 10, 201

[2] Mac Mahon, Jeff, “93% of Public Companies face climate risks; only 12% have disclosed it”, Forbes, Jul.13, 2016

[3] See: Plataforma regional LED LAC

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