Skip to content
Who's in the Video
Amit Chatterjee is chief executive officer and founder of Hara Software. Prior to founding Hara he led SAP’s fast-growing Governance, Risk and Compliance unit, increasing revenues from $30 million to[…]

Can we shift away from the notion of a people-based tax in this era of outsourcing and offshoring?

Question: Should we tax carbon emissions? 

Amitrn Chaterjee: The reality of the situation is, an additional tax rnthrough carbon may not be what the economic system can bear. The realityrn is, carbon tax or any sort of energy tax has to be offset against what rnare the taxes that you’re going to move away from. Payroll tax, as an rnexample, is something that’s been around since Otto Von Bismarck’s time.rn The question is, could we shift away from that notion of a people-basedrn tax, especially in the era of outsourcing and offshoring to one of, rnwhat’s the energy intensity of what you do from product and service rnstandpoint? 

And so I think there are three reactions when we rntalk about the tax notion. Right? The first is, is it actually a rnmeaningful proxy for natural resources consumed? Secondly, what’s the rnemotional tie to it? And thirdly, whether it’s feasible, whether or not rnorganizations should be able to deal with it. 

On the first, the rnnotion of, is this a correlation to consumption or natural resource rnimpact. The answer is, if you look at where energy sources come from andrn how you deploy your business or your organization the answer is, there rnis a correlation to... if I’m taxed on the energy consumption I use, andrn I create a product or service, I’m probably consuming some form of thatrn carbon issue. 

Secondly, the emotional issue. Taxes are a third rnrail in the United States. Taxes are a third rail in the U.K. Frankly, rntaxes are a third rail in every government-run entity today in the rnworld. As a result, the term tax makes it almost un-viable. As a result,rn the term tax makes it almost impossible for organizations to actually rndeal with a way to move forward. Governments can’t propose a carbon rntax. 

Thirdly, when we think about the feasibility of this, you rnknow, identifying where you built something and what energy source you rnused is a highly distributed and highly complex story. Very many rnhigh-tech manufacturers today, very many clothing manufacturers today rnhave no clue where their textile manufacturing facilities get their rnenergy. They have no idea where the assembly of their laptop or their rncell phone, or their mobile device was created. So, as a result, how do rnyou actually create the tax? Do you create it at the Wal-Mart shelf, or rndo you actually create it at the source of where the product was createdrn and bought?

Those kinds of questions around the tax issue make rnit a little bit more complex in compromising versus focusing on the rncost-reduction opportunity of energy efficiency and secondarily, the rnopportunity to grow revenue through taking advantage of the post-carbon rneconomy.
Recorded on May 19, 2010
rnInterviewed by Jessica Liebman