“Taxes can be used to better fight climate change”: An Interview with Tatiana Falcao, STG Policy Leader Fellow

Written by Kathryn Carlson on . Posted in Current profiles, Profiles

Tatiana Falcão, STG Policy Leader Fellow

Tatiana Falcão, STG Policy Leader Fellow

Continuing EUI Times’ series of interviews with the School of Transnational Governance’s Policy Leader Fellows, Kathryn Carlson meets with Tatiana Falcão, a tax law expert originally from Brazil.

“People are very reliant on energy, and if all of a sudden you’re faced with the fact that you have a much higher price than you’re expecting to have, that’s going to be a very difficult situation,” Tatiana Falcão tells me. Given that she’s an expert on international tax law focusing on carbon taxation, it’s not surprising that my conversation with the Brazilian STG Policy Leader Fellow has quickly turned to the gilets jaunes protests, and the French fuel tax policy that stoked them.

“You should tax diesel more harshly than you do any other fossil fuel, because it is more polluting”, she says. “It’s a really interesting kind of tax, because you’re really giving an economic incentive for people to switch into acquiring less carbon intensive fossil fuels, and in that way producing less pollution.” The mistake on the part of the French government, Falcão argues, was in rolling it out so suddenly: “They did so without the underlying marketing and communication that you need to have with society in general, with your multinationals, and your businesses, and your consumers. That’s always a dialogue which is very important when it comes to taxation, and particularly when it comes to carbon taxation. Ideally you have a tax that will increase over time. First you have to put out the plan, and explain to the population what are the benefits of having a tax like that. And to have a dialogue with a business – you don’t want businesses not to be able to run their day to day affairs.”

Falcão is at the Institute in part to focus on her research in environmental taxation. It’s certainly a worthy area of research for a lawyer with a background as storied as hers. After growing up in Brazil, taking her Bachelor’s degree and working in a law firm there, she left the country – “just for one year” – for an LL.M in Cambridge. Scholarships followed, and she found herself in New York, first studying another LL.M in international taxation at NYU, then at the United Nations working with a committee of tax experts. After the recession hit in 2008, Falcão returned to Brazil to practice for another two years, before moving to Amsterdam to work at the International Bureau of Fiscal Documentation, while also doing a PhD at the Vienna University of Economics and Business. Various high-flying jobs followed: the international policy department at Ernst+Young in London; another stint at the UN working on tax; and a fellowship at Muenster University, before arriving at the EUI and the Policy Leader Fellow programme.

But why the focus on this area in particular? “It’s actually quite a difficult line of work because not many people are really familiar with the fact that taxes can be used in order to better fight the effects of climate change”, she says. Carbon taxation in particular is her niche – “I wrote my PhD on that topic and suggested a multilateral carbon tax treaty, where several different countries would agree on a price for carbon and have some form of co-ordination when trading between themselves. Obviously, that’s a very ambitious project, because international co-ordination takes a very long time. The only way we are going to achieve those goals is if every country is engaged. So what I have been doing more recently is to try and find alternative approaches to convince countries that they have to set a price for carbon domestically.”

Falcão uses an example from her EUI fellowship project, a paper on taxes in the international maritime industry, to explain why carbon taxation in particular is such a pressing policy area: “A charger you buy for your iPhone is cheaper to buy from China than across the street. That shouldn’t be the result – from every economic perspective, you should have to pay more if you bring something from across the world than if you just buy next door. It’s only because we’re subsiding the environmental cost of that transport that you can have that result.” International shipping, she says, is “one of those invisible industries that nobody really cares about because nobody sees”. The problem is that international waters are “no man’s lands”: “No one technically has sovereignty to tax those emissions. My paper discusses how you would go about taxing carbon emissions from international maritime transports, and why it’s important to tax them.”

For Falcão, her career focus has always been a blend of research and practice. At the moment, policy is her priority – as well as her project on shipping taxes, she recently co-authored a report on how to implement environmental taxes while pursuing social fairness objectives. She also has a column in Tax Notes International, writing about issues in developing countries. “It’s an interesting marriage of academia and policy making”, she says. “We’re always trying to see what the trends are, what are the prospects, how this affects countries at different levels of economic development. I try to always marry my research in academia with other things I’m doing in practice.”

Is EUI a change of pace after her stints in major global cities? Falcão laughs: “I wish it were because I’ve been travelling a lot! It’s nice. When I’m here I’m really here, and I’m really dedicated to my research, and to making sure that I’m pursuing my academic goals. And at EUI, there’s a lot of policy thinking going on. I’m engaged with two high level policy dialogues that are going to be organised in early 2019, one on international taxation and one on climate change. I think EUI’s a very outward-looking institution – we’re in a secluded part of Florence but we’re always looking out to see how we might be able to affect other policy dialogues.”

The city of Florence gets a rave review, too: “I love it, of course! I really love Florence – we’re on the hills, it’s beautiful, every day I come in and it’s a beautiful scene. I try to come down every day to see the sunset because it’s gorgeous. My husband and I do lots of walks – we try to do a walk where you see a medieval excavation, or ruins, or a nice museum – Italy is full of those, everywhere you go you stumble into something that is very old or very interesting. It’s a great place to be.”