Implementing EU Green Taxes in Thailand

Introduction

When considering the body of regulatory and other mechanisms related to green taxation in the EU jurisdictions for the purpose of implementing these in Thailand, it is necessary to reflect on the notion of legal transplantation because that is in effect what is being done in this situation. In other words, a case is being made for transplantation of the market based measures that are implemented in Europe to Thailand. Legal transplantation is not something that is new to Thailand. Like most countries in Southeast Asia, Thailand has also seen some legal transplantation from European nations in the 19th and early 20th centuries. Therefore, making a case for legal transplantation in the area of environmental taxes is not a radical idea. That being noted, it may also be stated that any idea of legal transplantation must be such that is viable in the local conditions of Thailand. In other words, while EU market based instruments may be considered for implementation in Thailand, such a suggestion is validly made out only when it is viable in the local conditions of Thailand.

This chapter is divided into two parts. In the first part, this chapter discusses legal transplantation and justifies the transplantation approach for the implementation of green taxes in Thailand, based on the experiences of the EU nations that have implemented these measures. In the second part, this chapter discusses the actual EU market based instruments and also discusses how these instruments can be implemented in Thailand.

A Case for Legal Transplantation

This part of the chapter will use comparative legal literature to justify the comparative law methodology adopted in this research. This part will consider the suitability of comparative legal method for the purpose of informing reform of environmental taxation in Thailand. This part will also consider the particular examples of legal transplantation in Thailand in other aspects of its laws to argue for the suitability of legal transplantation in the Thai context.

Comparative law research has its uses for this research because it seeks to uncover similarities and differences between the approaches of two or more jurisdictions with regard to the same legal or social problem or issue. In this research, there is a focus on uncovering the lessons in Green Taxes from the EU, which may be viable for Thailand. For that purpose, comparative law methodology is suited to the purposes of this research. Comparative law research method focuses on the approaches of different jurisdictions and collects data on different legal institutions and how these respond to the same issue. In this way, the researcher can use the comparative legal research method for studying a legal concept and responses to it in two or more jurisdictions with the objective of understanding these different responses so as to glean lessons from these responses. One of the insightful statements on the utility of the comparative law approach is made by Mary Ann Glendon:

“Since the city must constantly be re-examining and revising its laws, its guardians would do well, he advises, to send out mature citizens to study especially good laws elsewhere and to seek assistance from wise persons, wherever they may be found, even in ill-ordered cities.”

What Mary Ann Glendon is emphasising on is the utility of studying different jurisdictions in order to glean lessons from these different jurisdictions that may be applied in a specific legal system. This does not mean that the exercise of comparative analysis is undertaken to apply any concepts that may be uncovered in other jurisdictions. The researcher suggests the application of only those concepts that are viable for the specific jurisdiction.

There are two methods that are involved in comparative law research. These methods are descriptive and applied comparative law research methods. The descriptive comparative law method is usually the first step in a comparative law research method, wherein the researcher describes the variations or similarities in the laws of two or more jurisdictions. When using the descriptive law research method, the researcher tabulates the regulatory mechanisms and the similarities and variations in these mechanisms in the jurisdictions that are being studied in the research. Some research studies may only involve the descriptive legal research methods, as the researcher may only be involved in tabulating the similarities or differences in the legal responses of different jurisdictions. The present study is not of that nature and it will involve not only the descriptive method but also the applied comparative legal research method. This is because the objective of the researcher is to come to suggestions on how the Green Tax regime in Thailand can be strengthened by applying some mechanisms that are applied in the EU jurisdictions.

The second comparative legal research tool is the applied comparative law method. This method emphasises on the provision of a legislative or regulatory framework for a specific jurisdiction which is based on the comparisons drawn between this jurisdiction and the other jurisdictions that are studied in the research. In that sense, the applied comparative law research method builds on the descriptive comparative law research method because it is on the basis of the descriptive tabulation that the researcher is able to suggest a regulatory or legislative framework for the specific jurisdiction. In this research, the focus of the researcher is to suggest a legislative and regulatory framework for the Green Tax system for Thailand based on the EU jurisdictions’ applications of the Green Taxes and the viability of these taxes for Thailand. The underlying justification for this approach is that comparative law research will be able to suggest some viable solutions for the Thailand environmental law and taxation based on the environmental tax instruments. The fundamental argument is that comparative legal research will facilitate a better understanding on how EU jurisdictions and Thailand respond to environmental tax instruments and how the framework of the former may be transplanted to the latter. This brings the discussion forward to the concept of legal transplantation and diffusion, because this is one of the central focusses of the present research.

Diffusion of law refers to the ways on which one legal system or tradition influences the making of laws in another. Due to the historical interaction between legal systems and effects of colonialism, legal systems have influenced each other historically. Therefore, there is already evidence of borrowing between legal systems or diffusion, which has led to the shaping of laws in one legal system based on the laws of the other. There has been significant study on diffusion of law since the 1950s and it has involved different labels under which such legal transportation took place between one jurisdiction and the other. These labels could be “reception, transplants, spread, expansion, transfer, exports and imports, imposition, circulation, transmigration, transposition, and transfrontier mobility of law.” Due to the diffusion of law, there is an argument that there is hardly any pure law anywhere, as Glenn puts forth:

“The mixed character of all jurisdictions is camouflaged today, however, by State institutions, taxonomic comparative law methodology which establishes distinct ‘families’ of law, by nationalist historiography which emphasizes that which may be distinctive in national legal systems. To say that all jurisdictions are mixed is not to accede, however, to environmentalist or diffusionist theories of cultural variety or to engage in any way in causal explanations of the phenomena.”

As the quote above emphasises, there is a mixed character in all jurisdictions, which is camouflaged by state institutions. This may also mean that there is sufficient scope for diffusion of law in environmental tax policy where distinctness may be provided by states adopting some foreign laws by adapting them first to their own local conditions. Therefore, even in the transplantation of a foreign law into a specific jurisdiction, some variation to that law may be made to adapt it to different local conditions.

The present research considers the market based instruments of environmental regulation for which comparative legal research will be appropriate as it relates to the EU and Thailand. The European experience with market based instruments will provide insight into how these instruments may be used to regulate the use of energy and resources by the consumers. This informs the research with the possible use of these instruments in Thailand. Green taxation law or environmental taxation has emerged as a substantial tool for both environmental and economic sector in the EU. Based on research, regulatory framework can be suggested for a possible Thai green tax policy as EU environmental legislation and the EU members’ national legislations may provide a model of environmental regulation for Thailand green tax regulatory framework. Comparative legal analysis in this research is done between EU Member States’ green tax law, more specifically, the United Kingdom, Sweden and Denmark. The EU provides a good example and comparator for understanding the efficiency of market based approach as compared to a command and control approach seen in developing countries like Thailand.

The EU continues to use a mix of command and control as well as market based instruments for environmental regulation; however, there is more extensive use of market based instruments as compared to Thailand. Although there may be significant differences between Sweden and Thailand in terms of socio-political climate and legal systems; there is scope for comparative research because the basic objective in comparative legal research is to study how two different legal systems respond to a common legal issue.

The European experiences with the market based instruments may be a viable transport into Thailand’s regulatory mechanism. One aspect of this is that divergent interpretation of the same instruments is possible in different legal systems. This is seen in the literature on arbitration for example, where harmonisation of the law of arbitration allows diverse interpretation with regard to the definition of arbitration agreement provided under the 1996 and UNCITRAL Model Law. This means that even if the same instruments are adopted in Thailand as they are in EU, the interpretation of these instruments may differ.

In environmental law, there is already evidence of transplantation of law, especially in the concept of sustainable development. This evidence also points at multiple interpretations and applications of sustainable development, although this concept is the most important and universally recognised concepts in environmental law. There is a circulation of legal models or “legal transplant” wherein a transfer of a rule takes place from one legal system to another. Sustainable Development, itself has seen the development of regulations based on principles of sustainable development, but in contexts that are different from one to the other country.

There are also some criticisms of legal transplantation as informed in literature on legal transplantation. Although much of this criticism stems from other areas of laws, such criticism is relevant to environmental regulation as well. For instance, one study criticises legal transplantation of bankruptcy laws from the United States on the ground that these laws have failed to serve the purpose, arguing:

“new proposed systems do not arise from existing cultural conditions. Rather, the laws are transplanted from elsewhere and the cultural views are expected to change with the laws. Many new bankruptcy laws have been transplanted from the United States, which has a very different cultural attitude toward debt forgiveness.”

The ground for cricitism of the bankruptcy law transplantation above is based on the cultural contexts of a place which may not match with the transplanted laws, due to which it is argued that legal transplantation may be inappropriate because it ignores the culture of the place into which the laws may be transplanted. This cultural mismatch may lead to the failure of the transplantation. In the context of the present study therefore, it may be pertinent to consider whether the concept of legal transplantation from EU environmental market instruments will match the culture in Thailand. In other words, in case of a mismatch, this legal transplantation may not be a viable option. In Thailand, an example of such failed transplantation can be seen in certain aspects of bankruptcy law transplanted from the US. Nevertheless, failure of transplantation in one aspect does not mean that transplantation in other aspects will also fail. Therefore, it will not be appropriate to dismiss the likely adoption of EU market instruments within the Thai regulatory framework without understanding what those mechanisms are and whether these are viable for Thailand.

Thailand in no stranger to legal transplantation. For instance, the Thai Law of the Three Seals, of 1805, which was passed one year after the French Code Civile, shows some influence of the French Civil Code. Admittedly, Thailand has had an uncomfortable relationship with western laws since the 19th century ushered in globalisation on Thailand and the latter was forced to reform its laws to make them more aligned with the western laws so as to attract trade. In some ways, Thailand had adopted certain precepts of western laws, even without being colonised by any western country. The process that Thailand adopted for the transplantation, for example in the drafting of the Law of the Three Seals, is useful in considering how legal transplantation can still continue to be done in Thailand. This process is explained as follows:

“[The drafting committee] avoided indulging in the too-easy plan of copying any foreign code, perfect as it might be, and of transforming their provisions, with slight alterations into Siamese legislation. They have for each draft pursued the same methods: first, they have made a general study of the matter as it stands in the existing Siamese texts….. and in the principal foreign codes…important decisions have been made and a good knowledge of local needs has in turn enabled the commissioners to submit drafts which do not consist only in theoretical terms but are framed according to the actual and real requirements on the country.”

Therefore, so long as the legal transplantation is not done in a manner that depicts a blind following of foreign regulatory mechanisms, it can be suggested as a viable option. A consideration of Thailand’s local needs and cultures, in the same way as legal transplantation was guided in the Law of the Three Seals and thereafter in other laws, will be an appropriate method for legal transplantation in the context of environmental taxation law in Thailand.

In the past, Thailand has allowed its laws to be influenced by foreign laws, for the purpose of reformation of its laws. For instance, the reformation of Thai family law in 1930s, led to the legal transplantation of European monogamy principles into Thailand, which had so far allowed polygamy. Thus, Book V of the Civil and Commercial Code in 1935 largely resembled European laws and retained little of the Thai traditional law related to family. Similarly, the reformation of land law through the Land Law in 1905 was based on the Napoleonic cadastral system, which led the registration of land titles.

Ultimately, the process of legal transplantation in Thailand made way for reformation of laws in Thailand. The legal transplantation was largely organic process as Hickling points out, wherein the drafters of Thai laws did not simply incorporate foreign laws into Thai laws but considered the merits of these foreign laws and also considered the viability of the transplantation as per the Thai local conditions. The same principles can guide Thailand to reform its environmental taxation laws, that are heavily based on command and control kind of mechanisms. Market based mechanisms that are now being relied on in the EU can provide some area for diffusion of law in the context of Thai environmental legislation.

Some aspects of Thai environmental law already depict legal transplantation, proving that the country is receptive to legal reform of its own laws based on the laws of other countries. In other words, diffusion in Thailand is already seen in the environmental law. Thailand adopted air quality standards in 1992, influenced by the experiences of other countries that had established such standards and were now showing improvements in air quality. After the adoption of such standards, Thailand saw remarkable progress in improving air quality in Bangkok. In this regard also, European influence can be seen in Thailand’s air quality standards, in the adoption of tailpipe emissions standards based on European standards, the use of cleaner burning fuels and imposition of taxes on older polluting vehicles. This shows that Thailand has already started legal transplantation in context of reformation of their environmental law and policy and strengthens the case for reform of environmental taxation reforms based on market based instruments as adopted in the EU.

In the next part of this chapter, focus will be on the green taxes that are adopted in the EU so as to inform a possible reform policy for Thailand. This second part of this chapter will evaluate the EU member state’s green taxes broadly with the objective of understanding the good practices involved in the implementation of these taxes. This part will also analyse the EU Green Tax Reform or Environmental Tax Reform (ETR) under the EU environmental policies. The evaluation of these taxes and the larger EU environmental protection regulatory framework will facilitate the identification of the characteristics which make them good models that can be followed in the ASEAN and Thailand.

EU Green Taxes

EU has implemented a significant number of green taxes in its jurisdiction. These green taxes will be discussed in this section. This section will also discuss the viability of adopting specific taxation measures within the regulatory framework of Thailand.

EU has wide experience in mobilising reforms in the area of green economy, which points at the seriousness with which the EU responds to the environmental concerns. One of the important steps in this direction is the conceptualisation and development of the European Union Emissions Trading Scheme (EU ETS), which itself was necessitated by the failure of the European Commission to introduce an effective EU-wide carbon energy tax in the 1990s. The EU also saw the coming together of the member states to devise the Concerted Action on Market Based Instruments (CAMBI) which operated between 1996 to 1998 and the Concerted Action on Tradable Emission Permits (CATEP). These steps taken by the EU indicate the seriousness with which the EU has viewed the application of the market based instruments within environmental taxation regulation. The EU ETS was motivated by the sharp increase in world oil prices, which led to the increase in energy tax level and consequently, higher energy prices and the resultant calls for reduction of energy tax rates in many European countries in 2008. The EU ETS, which commenced in January 2005 is the largest multi-country, multi-sector GHGE trading scheme worldwide.

However, some argue that instead of ETS, a carbon tax is the more appropriate market based instrument. This is so because carbon tax is more transparent and visible, which makes it harder to evade by the consumer. Moreover, the revenue from the carbon tax flows to an accountable government that may use the revenue generated from carbon tax for enhancing green energy access, such as, by low income households. Sweden was one of the first countries in the world to impose a carbon tax, when it implemented the tax in 1991. Sweden’s experience with carbon tax has been found to be more successful in limiting emissions as compared to cap-and-trade scheme, also because total social cost of combating climate change can be maintained at lower levels due to the carbon tax as compared to cap-and-trade.

Thailand also has been mulling over the implementation of carbon tax and emission trading scheme. The receipt of $3 Million in aid from the World Bank for the purpose of introduction of market based climate change mechanisms, is also a significant factor in creating an understanding that Thailand will develop market based mechanisms specifically targeting carbon emissions.

The Thai government may take into account two key variables for designing a carbon tax, which are, tax base and the rate. Stationary energy suppliers are usually large and highly visible, and these suppliers can pass the cost of the tax onto both private and business users of their energy. This means that there is a broad spread of the end users who will also be impacted by the tax and this will have a direct impact on the quantity of energy demanded as the end users are also impacted by the tax. This will ultimately impact the amount of GHGs generated and will encourage energy conservation strategies as well as a shift to green energy, which does not attract carbon tax, and is therefore less expensive. Apart from stationary energy providers, transport sector would also be a likely target because it is a significant contributor to GHG.

Another area where Thailand can learn from an EU country is in the area of water supply tax. Denmark implemented the water supply tax in 1994 and this part of the Danish response became an important tax reform as well as an important method of environmental protection, leading to reduction in water demand and leakage rate. Considering the concerns of the industry that levying of taxes will be contrary to the interests of the industry, the water supply tax is specifically able to dodge these concerns because industry and agriculture are not liable for this payment of this tax, meaning that potential negative impact on competitiveness of industry and agriculture is avoided by this tax.

Some EU member states have also seen a shift towards reforming tax systems as per the Environmental Tax Reform (ETR), which seeks to shift the tax burden from conventional market areas, such as production labour, to environmentally related fields, such as environmental pollution or use of natural resource. For instance, Denmark has introduced a three kinds energy and carbon taxes that are aimed at reducing environmental pollution and use of natural resources. Three taxes in Denmark are the energy tax, the CO2 tax, and the Sulfur tax. The energy tax relates to the energy content of the fuel, and is levied on fossil fuels, oil products, and coal; carbon dioxide tax relates to emissions; and Sulfur tax was introduced is levied on all fossil fuels with a specific Sulfur content in energy products, and is designed to incentivize consumption of energy products with low Sulfur content and to abate S02 emissions.

It is from the 1990s that a shift towards market based instruments is seen in the EU. Economic instruments or market based instruments in environmental policy first commenced in the Scandinavian states and then spread to the other European countries. At this time, the important economic instruments and tools, were related to energy and carbon taxes. It is to be noted that energy taxes were used in European countries like Denmark and Sweden since the 1920s; however, these taxes were then linked to fiscal policy, while these became linked to environmental objectives in the 1980s.

One of the areas in which EU jurisdictions have adopted green taxes is with respect to electricity consumption. The reason why EU has taken a proactive approach to green taxes in context of electricity consumption is the significant increase in electricity usage and the need for the “global electricity industry to reduce its carbon emissions more than 30% by 2020 together with reduced costs.” In Europe, the response to this need of reduction of carbon emissions has already been made.

The EU has started the move to green electricity, which is based on three instruments. The first instrument is related to quota regulations in terms of quota obligations, which are linked to the trade of certificates; the second is statutory entitlement of RES electricity plants; and the third is price regulation, which is effected through feed-in tariffs, quota obligations or green certificates, and bidding system. Other methods that are included in the green electricity formats include subsidies, financial incentives, and green funds, which are all market linked instruments. The EU is also taking steps to mitigate negative effects on climate and energy consumption as in December 2008, the EU Parliament agreed on a Climate and Energy Package for the purpose of reducing the EU’s overall greenhouse gas (GHG) emissions and increase the renewable target of a 20 % share of renewables by 2020.

In the EU, green taxation is linked to “double dividend” literature, which focuses on the use of taxation for providing gains in economic as well as environment contexts. Green taxes are a part of the indirect tax category and as such is a low component of taxation in EU countries. As the component of green taxation is relatively low within the wider taxation, it is considered that resorting to green taxation is unlikely to higher detrimental effects on economic efficiency. Although not a high component of taxation in the EU, Green taxation is posed as having a direct effect on energy efficiency, which helps minimise the corresponding efficiency losses that may increase with increase in tax rates.

Within Europe, the EU directives lay down the minimum standards that are to be followed, while countries are responsible for implementing these standards or higher standards through their own laws. Thus, standards may actually differ from country to country in Europe. An example can be seen in the implementation of the European Union Packaging Waste Directive, which was adopted in December 1994, and which creates standards for the management of waste by the EU member states. The implementation of this directive differs from country to country. In Germany, the packaging waste is dealt with as per the regulations set by the German government in Verpackungsverordnung of 1991 (amended in 1998), which makes manufacturers and distributors responsible for re-using and recycling their packaging waste. This requires the manufacturers and distributors to set up in- store facilities for collecting used packaging. The British model for packaging waste collection and recycling is different from the German model. The British model shows more use of market based instruments in this regard. The system works with the issuance of packaging recovery notes (PRNs), by accredited reprocessors, who are responsible for recycling or incinerating waste collected from industrial or household sources. Reprocessors can charge producers for supplying PRNs, for which the prices are determined by the weight of packaging reprocessed and market conditions. This means that producers can reduce their costs by consuming less, or re-using, packaging, which means that the system is creating financial incentives for reduced packaging-waste production.

The landfill tax of the UK is also a useful mechanism for resolving the landfill and waste management issue. The landfill tax was introduced in the UK in 1996, and it applies to commercial, industrial and municipal waste. The landfill tax is an important response to the UK waste management issues, which were significant considering that the UK was once amongst those EU nations that had the highest levels of landfill. The polluter pays principle provides the rationale for the introduction of this tax, which means that the tax is based on the logic that the polluter should pay the costs to the environment. When the tax was first introduced there were different tax liabilities for active and inactive waste, with the former being taxed at a higher rate than the latter. Active waste includes biodegradable waste and inactive waste includes construction waste. In 1998, the landfill tax regime was reviewed by the government and it was found that there was significant improvement in waste management post the implementation of the tax. Significantly, almost a quarter of companies had started a waste recycling system as a response to the landfill tax.

Landfill is no longer a desirable method of waste management and EU in general considers landfill to be at the bottom of the list for waste disposal. Moreover, landfill tax is also proving to be expensive for firms in the UK. As noted by one research, the construction industry in the UK spends over £200 million on landfill tax each year, and waste management is costing British firms 4% of their turnover with potential savings of 1% if a comprehensive waste minimisation programme is implemented.

In Thailand, waste management is a serious cause of concern as most of the municipal solid waste management is done through the open dumping sites in different cities in Thailand. This has led to the concerns for the Thailand Pollution Control Department (PCD), which aims to reduce the municipal solid waste generation, improve collection efficiency and improve recyclable material recovery. In 2004 there were 425 disposal sites out of which 95 were landfill disposal sites and 330 were open dumping sites. The estimated methane emission for that year was 115.4 Gg/year and it is projected that in case landfill sites are not upgraded and sanitary landfills not provided, the methane emission in Thailand will increase to 193.5 Gg/year. Waste management tax aims to promote a sustainable approach to waste management and the British experience with waste management is positive so far.

Thailand will have many examples within EU, and the kinds of market based instruments that it adopts will depend on the viability of the system in the Thai context. For example, considering the German and British systems on management of packaging waste, the British system may be more onerous in the beginning as reprocessors have to be established, but may lead to more promising results in the future as the producers of the waste will be able to respond to the system by producing less waste or by recyclying packaging material.

One of the aspects of green taxation in EU is the possible detrimental effect on low-income households, and this is one of the concerns depicted on the implementation of green taxes in EU contexts. The logic behind the potential detrimental effect of green taxes on low income consumers is that such taxes makes consumption of environmental resources more expensive, which may affect lower income households disproportionately, especially in the areas of domestic use of energy, water and transport, and domestic generation of waste. It is argued that negative impacts of green taxes can be reduced if the tax were designed keeping in mind the low income consumers, or introducing a compensation scheme. Another method of decreasing the undesirable effects of green taxes is by pragmatic classification of products in a sustainable and low VAT category, which has the potential of limiting the economic costs of the tax reform and limit undesirable distributional consequences.

With regard to energy usage, there are a number of measures that have been implemented in the EU, with some of them being market based instruments. These measures can be classified as positive or incentive based measures; negative or disincentive based measures, and other measures such as, ‘‘cap and trade’’ or ‘‘target and trade’’ measures. Thus, there are many instruments that have been introduced in the EU for the purpose of increasing energy efficiency of the consumers in the EU. The positive or incentives based measures include, subsidies, grants, low interest loans and tax exemption or reduction for energy efficiency interventions. Negative or disincentives based measures include energy or CO2 emission taxes, user charges, product taxes, and taxes on less efficient usage of energy. There is a move to create such instruments in Europe because of the fast depleting energy sources and the need to cut back on energy waste as well as the need to innovate on the newer methods of energy conservation.

One of the measures introduced in some European countries, such as, UK, Italy and France, is that of ‘White certificates’, wherein electricity and gas suppliers or distributors have to undertake the promotion of energy efficiency among final uses. These suppliers and distributors also have to show that they are implementing interventions that are designed to save a certain percentage of energy that they supply or distribute, which amount is certified through White Certificates, which are the certifications for the energy saving measures taken by such parties. Suppliers and distributors can also trade these certificates on the market.

Another method is the use of ‘Green Certificates’, which relate to the renewably-generated electricity. This relates to the obligations of the electricity suppliers or distributors and at times the end client, to show that a certain percentage of the electricity that they generate, distribute or use comes from renewable energy sources. Green certificates certify the use of renewably-generated electricity and these can be bought and traded in the market. Green certificates have been used more prominently in the European states as compared to the White certificates, partly because these have been in the use for longer and have for that reason gained more recognition. Green certificates have been found to be useful in increasing the renewable energy use in European countries, which makes the case for using green certificates in Thailand stronger. Certification will be useful for Thailand as these are non-legislative measures that are based on the voluntary actions of the market players; this means that the players will be motivated to increase their green energy usage because of the benefits involved in the usage and the savings initiated by adopting green energy.

Many European countries have employed feed in tariffs as a market based instrument, which allows the government to set a tariff price for a specific renewable technology, and the country’s supply companies or vertically integrated utilities have to purchase all renewable energy exported to the grid at this tariff. This system is applicable to the energy sectors and it is proven as a system that benefits developers in maintaining predictability and consistency and facilitate long term planning. Another method being used in European countries is the renewable portfolio standard (RPS), which can promote renewable energy into the electricity market without significantly increasing the prices of the electricity for the end consumers. This method is also specifically related to energy. Thailand has shown interest in diversifying its energy mix, for which one method is to promote the use of renewable energy sources. There are environmental and economic benefits to the use of renewable energy sources. In Thailand, these benefits are seen in the reduction of the environmental impact of using conventional fossil fuels and also reduction of spending foreign exchange on the import of fossil fuels. Another economic benefit of this approach is that it will benefit the agricultural community in Thailand, which will benefit from the use of biomass sources. Literature indicates that Feed-in-Tariff and Renewable Portfolio Standard are useful for the supporting of new renewable electricity. As these are market based instruments, these can be expected to enhance the interest of the private sector interest by providing them with some economic incentive, and help to achieve policy objectives through direction.

One criticism of green taxes is that these may increase production costs relative to competitors, as argued by some opponents of the green tax regime in the EU. This may be a significant issue for Thailand as well and one that merits some close attention as Thailand is one of the fast-developing countries in the world and may not like to compromise on its low manufacturing costs as that may make it lose its competitive advantage. It has been argued that the negative impacts of green taxes may include decreased employment, lower market shares, depressed growth and loss of investment. At the EU level also, there has been some opposition to green taxes on this ground. Therefore, a pertinent question that may be asked is whether Thailand will be able to balance its environmental protection aims with economic aims if it imposes green taxes.

Before considering the possible negative impacts of green taxes on Thailand’s economy, it will be pertinent to consider ‘green GDP’, which also needs to be factored into the traditional GDP before it is ascertained whether green taxes are good or bad for the economy. Green GDP is said to be an indicator of economic growth and it factors in environmental impact into the traditional GDP. Therefore, environmental costs are subtracted from the traditional GDP for ascertaining the green GDP of the country. In other words, Thailand’s green GDP will be ascertained by subtracting the environmental costs of its trade activities from the GDP. Thus, if environmental costs are high, the green GDP will come down and if the environmental costs are low, then the green GDP will go up. Environmental costs include depletion cost, degradation cost and defensive cost, which are the various costs that are suffered by the environment in the carrying out of the trade activities. What this means is that even if Thailand’s economy is considered to be highly productive and profitable by looking at the traditional GDP, but the costs to the environment are high, the actual green GDP will be low.

Another point that may be made here is that too much reliance on the wellbeing of the ‘market’ in the economic sense, without reference to the impact of market activities on the environment is not beneficial to the society as a whole. It cannot be denied that the market by itself has failed to protect the environment; instead the capitalist market has generated activities that have ultimately led to the erosion of the environment. Therefore, there is a need to correct these market values. As pointed out by one author:

“The assessment of a sub-optimal provision of ecosystem services or pollution levels usually points to a lack or even absence of markets that would faithfully reflect the economic values of the environment. MBIs are then appreciated as a means of correcting these values.”

It may be argued that instead of market based instruments, command and control type of measures may be made for the correction of market values that lead to the erosion of the environment. However, command and control type of mechanisms do not offer the kind of flexibility that is seen in the market instruments, which have the potential to lead consumers to make decisions according to their understanding of the costs and benefits of such decisions. From the perspective of economics, this makes sense because agents have the opportunity to balance the costs and benefits of their use of the energy resources or the costs paid by them for the levels of pollution that they do. Therefore, there is more flexibility in this approach, wherein with the revelation of more information, the agents can innovate and come up with new ideas on reduction of energy resource use and pollution.

Thailand is aware of the benefits of a greener economy and has already taken steps to foster this green economy, including making policies in Thailand that are conducive to the transfer of environmentally sound technologies, and eliminating barriers to transfer of environmentally sound technologies, such as, reduction of import duties, corporate taxes, and increasing of subsidies. All these steps indicate that the Thai government has taken on the issue of green economy seriously, which suggests that the government may be open to introducing more green tax measures in Thailand if they are conducive for the environmental protection and not too detrimental to the interest of the Thai industry.

Market based mechanisms are generally considered to be beneficial as these are economically efficient and may lead to the achievement of renewable energy policy objectives. As market-based mechanisms seek to achieve greater environmental protection and also enhance private sector interest through some form of economic incentive, it may be expected that these mechanisms may not necessarily harm the economy of Thailand. Market based mechanisms, such as, fiscal measures, subsidy measures, and obligations imposed on market players can be more efficient in achieving targets of the government in the field of environmental protection.

Conclusion

Comparative legal literature shows that there is significant merit in looking into the legal systems of different nations in order to learn lessons that can be applied in a specific legal system. Legal transplantation in that sense may be beneficial in that it may be a mode for introduction of new legal concepts and practices. Specific measures that can be implemented in the Thai environmental tax regulation can include carbon tax, landfill tax, and waste management tax. Green certificates and white certificates are also some market based measures that can be adopted in the Thai laws. While these measures are adopted in the EU jurisdictions, it is important to note that the viability of these taxes in Thailand will also form an important area of research before these taxes are applied in Thailand. In such cases, it is also pertinent to note that even if these taxes are adapted to suit Thai local conditions, it is still reflective of legal transplantation which allows countries to be influenced by foreign laws but implement these laws in their own countries as per the suitability of these laws.

References

Walliman N, Social Research Methods: The Essentials (London: Sage 2015).

Glendon MA, Carozza P, and Picker C, Comparative legal traditions in a nutshell (West Academic 2015).

Beckman J, Comparative Legal Approaches to Homeland Security and Anti-Terrorism (Ashgate Publishing 2013).

Gutteridge HC, Comparative law: An introduction to the comparative method of legal study and research Vol. 1 (CUP Archive 2015).

Harding A, ‘Comparative Law and Legal Transplantation in South East Asia: Making Sense of the ‘Nomic Din’’ (2001) 5 Adapting legal cultures 199.

Twining W, ‘Diffusion of law: A global perspective’ (2004) 36(49) The Journal of Legal Pluralism and Unofficial Law 1.

EEA, “Environmental taxation and EU environmental policies” (Report no. 17/2016, Luxembourg: Publications Office of the European Union, 2016).

Carraro C and Leveque F (eds.), Voluntary approaches in environmental policy Vol. 14 (Springer Science & Business Media 2013)

Gunningham N, ‘Environmental Law, Regulation and Governance: Shifting Architectures’ (2009) 21 Journal of Environmental Law 179.

Arvind TT, ‘The ‘Transplant Effect’ In Harmonization’ (2010) 59(1) International & Comparative Law Quarterly 65.

Alogna I, ‘The circulation of the model of sustainable development: Tracing the path in a comparative law perspective’ in Legal Aspects of Sustainable Development (Springer 2016).

Alogna I, ‘The circulation of the model of sustainable development: Tracing the path in a comparative law perspective’ in Legal Aspects of Sustainable Development (Springer 2016).

Harding A, ‘The eclipse of the astrologers: King Mongkut, his successors, and the reformation of the law in Thailand’ in Helen J Nicholson and Sarah Biddulph (eds.), Examining practice, interrogating theory: Comparative legal studies in Asia (BRILL 2008).

Yang T and Percival RV, ‘The emergence of global environmental law’ (2009) 36 Ecology LQ 615.

Speck S, ‘The design of carbon and broad-based energy taxes in European countries’ (2008) 10 Vt. J. Envt. L. 31.

Andrew B, ‘Market failure, government failure and externalities in climate change mitigation: the case for a carbon tax’ (2008) 28(5) Public Administration and Development: The International Journal of Management Research and Practice 393.

Avi-Yonah RS and Uhlmann DM, ‘Combating Global Climate Change: Why a Carbon Tax Is a Better Response to Global Warming Than Cap and Trade’ (2009) 28 Stan. Envtl. LJ 3.

Jagers SC and Hammar H, "Environmental taxation for good and for bad: the efficiency and legitimacy of Sweden's carbon tax" (2009) 18(2) Environmental politics 218.

World Bank, Thailand/EAST ASIA AND PACIFIC- P128965- Thailand: Partnership for Market Readiness (PMR) - Procurement Plan (English) (Washington, D.C.: World Bank Group 2017).

Cansino JM, del P. Pablo-Romero M, Román R and Yñiguez R, ‘Tax incentives to promote green electricity: an overview of EU-27 countries’ (2010) 38(10) Energy Policy 6000.

Aune F R, Dalen H M and Hagem C, ‘Implementing the EU renewable target through green certificate markets’ (2012) 34(4) Energy Economics 992.

Barrios S, Pycroft J and Saveyn B, ‘The marginal cost of public funds in the EU: the case of labour versus green taxes’ (2013) Fiscal Policy and Growth 403.

Bailey I, ‘European environmental taxes and charges: economic theory and policy practice’ (2002) 22(3) Applied Geography 235.

Davies B and Doble M, ‘The development and implementation of a landfill tax in the UK’ in OECD, Addressing the economics of waste (OECD Publishing 2004).

Osmani M, ‘Construction waste minimization in the UK: current pressures for change and approaches’ (2012) 40 Procedia-Social and Behavioral Sciences 37.

Chiemchaisri C, Juanga JP, Visvanathan C, ‘Municipal solid waste management in Thailand and disposal emission inventory’ (2007) 135 (1-3) Environ Monit Assess. 13.

Ajayi SO and Oyedele LO, ‘Policy imperatives for diverting construction waste from landfill: Experts’ recommendations for UK policy expansion’ (2017) 147 Journal of Cleaner Production 57.

Farinelli U, Johansson TB, McCormick K, Mundaca L, Oikonomou V, Örtenvik M, Patel M and Santi F, ‘“White and Green”: comparison of market-based instruments to promote energy efficiency’ (2005) 13(10-11) Journal of cleaner production 1015.

Keyuraphan S, Thanarak P, Ketjoy N and Rakwichian W, ‘Subsidy schemes of renewable energy policy for electricity generation in Thailand’ (2012) 32 Procedia Engineering 440.

Golub J, ‘New Instruments for Environmental Policy in the EU’in Jonathan Golub (ed.), New instruments for environmental policy in the EU (Routledge 2013).

Kunanuntakij T, Varabuntoonvit V, Vorayos N, Panjapornpon C and Mungcharoen T, ‘Thailand Green GDP assessment based on environmentally extended input-output model’ (2017) 167 Journal of Cleaner Production 970.

Pirard R, ‘Market-based instruments for biodiversity and ecosystem services: A lexicon’ (2012) 19 Environmental science & policy 59.

Chotichanathawewong Q and Thongplew N, Development trajectories, emission profile, and policy actions: Thailand (ADBI Working Paper 352, 2012).