Does Tax Policy Support The Circular Economy?

The circular economy envisages a shift away from the linear “take-make-dispose” model to a system where products and materials are reused in new cycles. While we are beginning to see a focus on greater resource utilisation and waste reduction, only 8.6% of all materials extracted and used make it back into our economy.

A transition to the circular economy is high on the political agenda of many countries as evidenced by the recent U.S. Climate Bill (2022 Inflation Reduction Act) and the EU’s Green Deal. While explicit legal commitments to tackle climate change are crucial to promoting sustainable business practices, it is equally important to make sure that the adoption of circular business models is not unintentionally hampered by any legacy legal rules that were designed when climate change was not considered a major concern.