Principles of taxing for environmental emission and use of natural resources
Table of contents: The Kazakh-American Free University Academic Journal №5 - 2013
Author: Gavrilova Yuliya , Kazakh-American Free University, Kazakhstan
Principles, i.e. fundamentals for legal regulation of relations
between nature and society, are intended to find out main tendencies of
environmental taxes levying.
Let’s make an attempt to distinguish key points of our vision of
principles concerning tax-levying for environmental emission and use of natural
resources based on state standards and theoretical views of scholars studying
legal problems of environment protection and rational nature management.
Proceeding from the fact that environmental payments in their legal
nature are not to be taxes, the lawmaker needs to follow the principle of
fiscal neutrality. According to the Tax Code of the Republic of Kazakhstan tax is a compulsory contribution to state revenue levied by the government.
The main purpose of tax levying is financial support of state
activity. In some respects environmental payments are taxes but the main
purpose of their levying is nature protection stimulation. It is known that
emissions in excess of the permissible limits are paid at the increased rate,
thus inducing natural resources users to conform with the regulations. Thus,
material interest of natural resources users in rational nature management
leads to favorable environment. T. Petrova stated the payment base of
environmental pollution payments is “either emissions to atmosphere and water
or waste products. Hence, the less the payment base (and consequently the
volume of payment), the more it meets the requirements of environment
protection, society, and state. From this point of view, environmental payments
differ from other statutory payments and taxes” [1, p. 65].
In Kazakhstani law there is no a definition for the institution of
tax for environmental emission and use of natural resources. On the one hand,
such payments are stipulated in the articles of Environmental Code which is one
of the gears of economic regulation for environment protection and use. On the
other hand, the procedure of environmental payments levying is regulated by the
norms of Tax Law. From our point of view, the system of environmental payments
is to be developed in the terms of its eco-legal nature, not fiscal.
Professor T. Petrova gives convincing theoretical ground in favor of
non-tax nature of environmental payments based on the following: compensatory
nature of environmental payments and the correlation (though partial) of the
payment with the volume of different types of emission. The given function of
environmental payments is insured by the special-purpose and compensated nature
of their levying thus being different from fiscal and gratuitous relations. The
entity pays for use of natural resources and consequently for emission of a
certain quantity of harmful substances. That is why environmental payments are
considered to be a kind of process costs similar to land and water use fees.
The given concept corresponds to the economic approach to the meaning of environmental
payments as a form of compensation for the damage and as an element of
environmental, not fiscal relations. In our opinion, it is an original legal
concept of the environmental legislation having no parallels in tax or civil
legislation. Its further development is thought to occur within the context of
environmental not tax legislation as their objectives are quite different [2,
The efficiency of environmental payments depends on the way of their
expenditure. Therefore, environmental payments regulation is to be based on the
principle of special-purpose use of environmental payments. These funds are to
be used only for lessening the negative impact on the environment. The most
telling example is the case of the void Environmental Law of the Republic of Kazakhstan stipulating the norms of special-purpose use of environmental
payments to the State Fund of Environment Protection. According to Article 34
of the given Law the funds must not substitute other sources of finance and be
used only for:
1) scientific and technological research, assistance to application
of resource-saving and environmentally friendly technologies;
2) participation in financing of construction and reconstruction of
environmental facilities carried out by legal entities – natural resource
3) accomplishment of measures on restoration of polluted natural
4) payment of compensation in the procedure prescribed by the Law;
5) participation in development and realization of programs,
projects, regulatory and procedural documents aimed at the improvement of the
6) development of environmental education;
7) creation and development of natural areas of preferential
8) upgrading of facilities of executive authorities in the field of
9) other environmental purposes.
It is recommended to emphasize the significance of such
organizations as the State Fund of Environment Protection. Their autonomy, from
our point of view, is the guarantee of special-purpose use of the money. It is
appropriate to cite M. Tleubergen, “The main purpose of such Funds is the
formation of centralized financing source independent of the state budget
necessary as a supporting state structure supplementing state expenditures for
environmental purposes” [3, p. 17].
Nowadays environmental payments to state revenue are not always used
purposefully. Local executive authorities appropriate the funds for
environmental measures on leftovers thus turning the system of environmental
payments into the source of state revenue. The volume of environmental payments
to state revenue increase year on year. For instance, over a period of
2002-2004 the volume of environmental payments increased more than twice and
accounted for 15841 million KZT. Besides, in 2004 financing of environmental
measures all over the country made up 3347 million KZT or 21% of all payments
(in 2003 – 27%) thus illustrating disinterest of local executive authorities in
solving environmental problems. Environmental measures are more financed in Almaty
city - 76.5%, Kostanay region – 73%, Almaty region – 72%, Southern-Kazakhstan
region – 58%, Kyzylorda region – 52.1%. Akmolinsk region, Eastern-Kazakhstan
region, Zhambyl region, Western-Kazakhstan region, Karaganda region, Mangistau
region, and Astana city did not fulfill their plans of environmental measures
financing. Atyrau region and Pavlodar region did not draw the minimum of
The history of eco-legal regulation of special-purpose use of
environmental payments confirms the fact that the Environmental Code currently
in force requires its supplementing with the norms stipulating special-purpose
use of environmental funds.
The principle of environmental payments declaring is also to become
very important. According to it, all payers must submit declarations to
authorized government bodies enclosing all necessary documents to check the
accuracy of the amount of charge calculations. The lawmaker is to assign the
objects of declaring, the rights, duties, and responsibilities of declarants,
the procedure and the terms of environmental payments declaring, etc. The given
principle is similar to the taxation principle stipulated by Article 5 of the
Tax Code of the Republic of Kazakhstan – the principle of determinacy. It
describes all grounds and order of origin and discharge of tax duties, the
responsibilities of tax agents to calculate, withhold, and remit taxes. So, the
suggested environmental payments declaring principle has analogy with the
institution of declaration taken from the Tariff Legislation and with the
principle of taxation determinacy of the Tax Code of the Republic of Kazakhstan.
The above-mentioned fundamental principle is also interrelated with
the principle of timely and compulsory environmental payments. It is necessary to
take into account the fact that authorized authorities must check the accuracy
and timeliness of environmental payments to state revenue levied by the
environmental agencies. The agencies of the Ministry of Environment and Water
Resources of the Republic of Kazakhstan must assign the subjects for
environmental payments and the payment base; maintain records of pollution
sources and environmental payers; fix differentiated emission and pollution
quotas; develop procedural guidelines for environmental taxes levying. It
should be noted that in the Republic of Kazakhstan all these functions are
conferred on environmental and (partially) fiscal agencies. In our opinion,
financial control over environmental payments is to be carried out by state
environmental bodies for better recording the environmental pollutants.
Kazakhstani researcher A. Assylbekov considers ecological monitoring
as a special-purpose activity of state governing bodies aiming at control of
compliance with environmental requirements, identification of reasons and terms
of origin of environmental liability, and prevention of legislation violation
[4, p.47]. We share his opinion and suggest to consider control over
environmental taxes as a part of ecological monitoring exercised by the Environmental
Ministry bodies and to stipulate it in Article 114 of the Environmental Code of
the Republic of Kazakhstan. Article 114 does not describe specific objectives
for monitoring in the sphere of environmental taxes. To fill this gap it is recommended
to work out Regulations for State Monitoring of Environmental Payments. The
given document is to be approved by the Minister of Environment and Water
Resources and define: the title of tax-levying organizations and their
competence; the procedure of control over environmental payments; requirements
to reporting forms; the procedure of taking measures after monitoring, etc.
It should be emphasized that the system of environmental taxes
monitoring depends on the efficiency of the state environmental control over pollutants.
Such taxes may be levied only in cases of pollution in the excess of the
established limits. To record such cases the state is to implement instruments
of control over pollutant emissions at enterprises and to daily maintain
records of emission volume and compliance.
The significance of the given principle becomes evident in case of
difference between officially declared and real environment exposure levels
exposed during environmental auditing.
The term “auditing” is taken from financial vocabulary. World Bank
gives the following definition: “Environmental Auditing is a systematic study
of ecological information about an organization or a facility for compliance
with auditing criteria”. The criteria are defined by the reasons and objectives
for auditing. The Head of the State Environmental Impact Assessment Department
of the Territorial Environmental Administration (Karaganda region) G.
Sukhorukov considers one of the objectives of environmental auditing
“troubleshooting of accounting, reporting, operating, and financial records”
[5, p. 13]. In our opinion, Article 80 of the Environmental Code of the Republic of Kazakhstan stipulating general provisions for environmental auditing is to be
supplemented with the defining of the objective to make the process of
environmental auditing more comprehensive.
Even more, in the end of 1990 commercial banks of industrially
advanced countries used environmental auditing to minimize risks of nonpayment
on loans caused by drawbacks of environmental management of organizations -
recipients of loans. Over the last years international banks resorted to
environmental auditing as an instrument of environmental management using past
and current data of environmental impact assessment at the financed
organizations and companies, e.g. environmental auditing of the metallurgical
complex in Temirtau (Karaganda region).
In some countries, including USA, the objective of environmental
auditing is not only the compliance with the environmental legislation but the
ground for development of pollution abatement policy.
According to P. Vaganov, “Nowadays the USA Federal Government expends
annually more than 30 billion USD for habitat restoration and protection projects.
As it is not enough, problems of optimal allocation of funds and environmental
programs supervision become more and more urgent. Some experts see the solution
of the problems in development and stipulation in environmental legislation the
concept of eco-risk allowing to use credible qualitative criteria for decision-making
process. Qualitative rating potential is conditioned by the analysis of
eco-risk being based on the so-called two-dimensional risk detection (the
product of environmental damage severity estimate and environmental damage
probability ratio). So, if we estimate a certain ecocatastrophe aftermath of
100 million USD and the its probability of 1 % (0,01), the corresponding risk
makes up one million USD. If we estimate the cost of some environmental
measures taken of 300.000 USD and the probability of the catastrophe 10-fold
reduced, the residual risk makes up 100.000 USD. The derived benefit is estimated
as a difference between the initial and residual risks at the sum of 900.000
USD (three times the cost of measures) [6, p.84].
At the same time due to the established access of economic entities
to natural capital in the environmental legislation of the Republic of Kazakhstan there are no amendments to economically justify eco-risk. Moreover, the
concept “eco-risk as a probability of unfavorable environmental changes as a
result of certain factors” stipulated in general provisions of the Environmental
Code of the Republic of Kazakhstan neither includes in the theory of risk nor
reflects the economic constituent of eco-risk thus impossible to be regulated
by economic methods. As well as Professor G. Motkin we consider eco-risk a situational
qualitative index of environmental threat taking into account its aftermath as
a form of economic damage caused by a recipient at certain probability [7, p.
As can be seen from the above, environmental auditing is closely
related to different eco-legal and economic mechanisms and turns from
“conventional law enforcement instrument into economic and legal instrument of
environmental activity incentive. The environmental activity conformance
inspection allows to find out the causes of environmental offences and to take
appropriate measures to exclude fine sanction imposing, e.g. in case of an environmental
offence the procedure of auditing may lessen the fine rate” [5, p. 12].
Late payment of environmental taxes is related to the principle of unavoidability
of responsibility for violation of legislation in the sphere of environmental
taxes applying both to tax-payers and state tax levying authorities. Inappropriate
diversion of state revenue funds is the grounds of liability for violation of
legislation in the sphere of environmental taxes.
Within the given context it is necessary to emphasize the following:
the payment for environmental emission and use of natural resources shall not
exempt the entity from environmental damage repair.
Another important principle in the sphere of environmental payments
is the one of environment impact licensing. The license allows to use natural
resources on certain conditions and stipulates the terms of payment. There are
different types of licenses in meaning and in form. For instance, the grounds
for forest use are either a felling license or a forestry card. The felling
license gives the right to harvest wood, soft resin, tree sap, etc. The forestry
card gives the right to use woodlands for hunting, research, tourism, and
recreation. The forms of felling licenses and forestry cards and the procedures
of their accounting, storage, completion, and distribution are established by
According to the Decree of the Government of the Republic of Kazakhstan “On Adoption of Regulations for Licensing Wildlife Use”, licenses for
hunting and fishing may be in the form of stamps with the picture and
description of animals. The list of animal species for hunting and fishing is
also established by state authorities.
Licensing of environmental emission is regulated by the
Environmental Code of the Republic of Kazakhstan (hereinafter referred to as EC
RK). According to Paragraph 2 of Article 101 of EC RK environmental payments
for emissions within the permissible limits are levied under the List of
Pollutants approved by the Government of the Republic of Kazakhstan. Article 70
of EC RK stipulates the list of documents for environmental emission licensing:
1) information about the user of natural resources and the type of
2) license validity;
3) the terms of nature resources use including emission limits;
4) the program of environmental measures for the period of license;
5) the program of environmental control.
We must emphasize that according to the given article environmental
emission licensing does not concern norms of taxing for environmental
emissions. Therefore it is recommended to draw lawmakers’ attention to
stipulating the proposition about obligatory presentation of documents of
environmental payments to Article 70 of EC RK.
To summarize, it can be noted that despite gradual introduction of
contractual basis to environmental relations the administrative regulation is
still of great importance.
The list of principles of environmental taxes levying can be
continued as they reflect not only current relations but progressive tendencies
of social development. Their importance is obvious as most of them include
models of rights and responsibilities of legal relations of the norms
stipulated in the EC RK and in other environmental documents.
In spite of the fact that principles of environmental taxes levying
are a well-defined system based on their complexity, they may become more
specific falling into autonomous groups depending on specific relations they
regulate, for instance, principles of taxes for environmental emission,
principles of taxes for use of certain class of natural resources.
At the same time principles of environmental taxes levying require
regulatory support to make them one of the effective instruments of
environmental regulation of the economy. The concept is to become a program
document defining principles and strategies for further improvement of environmental
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Table of contents: The Kazakh-American Free University Academic Journal №5 - 2013