Machine generated contents note: 7.6. The last word on subsidies in the environmental policy context. 1.1. Introduction -- 1.2. The context -- 1.3. Methodology -- 1.4. Chapter outline -- 2. Tax Expenditures -- Their Origins, Nature, And Issues -- 2.1. Introduction -- 2.1.1. The Objectives of this Chapter -- 2.2. Surrey's expenditure control theory -- an overview -- 2.3. Identification of the benchmark tax base -- 2.3.1. Tax Expenditures and Direct Expenditures -- 2.4. Measurement: subjecting tax expenditures to the evaluation process -- 2.4.1. Measuring the Budgetary Costs of Tax Expenditures -- 2.5. Measurement: the instrument choice issue -- 2.6. The instrument choice issue: a comparison of the effects -- 2.6.1. Equity -- 2.6.2. Vertical Equity -- 2.6.3. Horizontal Equity -- 2.6.4. Economic Efficiency -- 2.6.5. Effect on Resource Allocation -- 2.7. Instrument choice: the complementary role of policy design -- 2.7.1. Transparency -- 2.7.2. Effective Targeting -- 2.7.3. Managing Inertia -- 2.7.4. Ease of Administration -- 2.8. Tax expenditure analysis: a reassessment -- 2.9. Conclusions -- 3. The Environmental Policy Context: Issues And Challenges -- 3.1. Introduction -- 3.1.1. The Environmental Externalities Context -- 3.1.2. Pricing Instruments -- 3.2. Tax expenditures in the environmental context: their policy basis -- 3.3. Contemporary context of their use in environmental policy -- 3.3.1. Fostering Environmentally Friendly Activities -- 3.3.2. Perverse Subsidies -- 3.3.3. The Policy-Instrument Mix Context -- 3.4. Implementation challenges in the environmental policy context -- 3.4.1. Rent Seeking -- 3.4.2. Poorly Coordinated Incentives -- 3.4.3. Information Asymmetry -- 3.4.4. Crowding out Other Investments -- 3.4.5. The Rebound Effect -- 3.5. Conclusion -- 4. Financing Innovation And Deployment Of Cleantech Through Tax And Direct Expenditures -- 4.1. Introduction -- 4.2. The structure of this chapter -- 4.3. The nature and scope of the cleantech sector -- 4.4. The innovation process -- 4.4.1. Defining Innovation -- 4.4.2. Patterns of the Innovation Process -- 4.5. The rationale for public expenditure on R&D -- 4.5.1. Market Failures and Barriers to Innovation -- 4.5.2. Tax Competition -- 4.5.3. General Context for Implementing Support Programmes -- 4.6. Research and development tax incentives (R&DTIs) -- 4.7. Expenditure-based incentive regimes -- 4.7.1. Defining the Base for Research and Development Tax Incentives -- 4.7.2. Incentive Base -- 4.7.3. Categories of Eligible Expenses -- 4.7.4. Tax Base -- 4.7.5. Deductible Allowances and Tax Credits -- 4.7.6. The Bases for Applying Tax Credits -- 4.7.7. Carry Forward/Carry Back Provisions -- 4.7.8. Research and Development Capital Allowances -- 4.7.9. Accelerated Depreciation -- 4.7.10. Administration -- 4.8. Income-based incentive regimes: tax rate reductions -- 4.8.1. Tax Breaks for Intellectual Property (IP): Patent Boxes -- 4.9. Other public support mechanisms for business research and development -- 4.9.1. Direct Expenditure Programmes -- 4.9.2. Pitfalls of Direct Expenditure Programmes -- 4.9.3. Direct Expenditures and the Fostering of Innovative Programmes -- 4.10. The relative merits of tax and direct expenditure programmes -- 4.11. Conclusion -- 5. Financing Environmental Expenditures Through The Earmarking Of Taxes And Charges -- 5.1. Introduction -- 5.2. The nature and scope of earmarking -- 5.2.1. Types of Earmarking and the Context in Which Applied -- 5.2.2. Strong Earmarking -- 5.2.3. Weak Earmarking -- 5.2.4. Differentiation between Taxes and Charges -- 5.2.5. Tax Packaging -- 5.3. Earmarking of taxes -- 5.3.1. Its Evolution in Public Finance -- 5.3.2. The Theoretical and Legal Basis for the Earmarking of Revenues -- 5.4. Categories of earmarked taxes -- 5.4.1. Cost-covering Charges -- 5.4.2. Reparative Taxes -- 5.4.3. Tax Refund Systems -- 5.4.4. The Partial Coverage of an Industry Sector to Emission Taxes -- 5.5. The earmarking debate -- 5.5.1. The Case Against -- 5.5.2. The Case for Earmarking Taxes to Finance Public Expenditures -- 5.5.3. A Wider Role for Earmarking? -- The Extra-Territorial Dimension -- 5.6. Conclusions -- 6. Restructuring Environmentally Harmful Transport Subsidies: A Case Study Of Employee Car Benefits -- 6.1. Introduction -- 6.1.1. Objectives of this Chapter -- 6.2. Challenges of restructuring perverse transport subsidies in context -- 6.3. A background to the regime for taxing in-kind benefits: Australia -- 6.4. Mechanics of the taxing framework -- 6.4.1. Overview -- 6.4.2. Australia -- 6.5. Policy basis for the concession -- 6.6. Calls for the reform of the car fringe benefits tax system -- 6.6.1. Criticisms of the Inequities Fostered by the Concession -- 6.6.2. Broad Basis of Proposals to Reform the SFM Concessions: Australia -- 6.6.3. Environmental Basis of Proposals to Reform the Concession -- 6.6.4. Effects of the Subsidy on Congestion, Noise and Accidents -- 6.6.5. Restructuring the Subsidy: Australia -- 6.6.6. The Post-1994 Changes -- 6.6.7. The Goods and Services Tax (GST) Changes: Post-1 July 2000 -- 6.6.8. The Post-May 2011 Changes -- 6.6.9. The 16 July 2013 Surprise Announcement -- 6.6.10. Administrative Responses to Valuation of Car Benefits -- 6.6.11. Evaluation: Australia's Experience -- 6.7. Background to the UK's company car tax (CCT) reforms -- 6.7.1. The Post-2002 Company Car Tax Reforms -- 6.7.2. Evaluation -- 6.8. EU review into its company car tax regime -- 6.9. Canadian proposals: reforming the taxation of company cars -- 6.10. Conclusions -- 7. Conclusion -- Final Thoughts -- 7.1. Introduction -- 7.2. Tax expenditures and policy implementation -- 7.3. Has tax expenditure analysis provided a platform for reform? -- 7.4. Evolution of policy instruments that circumvent the limits of spending instruments -- 7.5. The way forward -- 7.6. The last word on subsidies in the environmental policy context.
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