A fiscal revolution inspired by the Capabilities Approach to reduce socioeconomic impact of climate change and strengthen the resilience of tax systems

This paper shows that a fuller integration of the economic theory of well-being into strategies adopted to reduce the impact of climate change could help to avoid potential conflicts between the mitigation measures applied and the consumption of energy derived from fossil fuels. The paper moves along the path traced by Wood and Roelich (2019) with their Tensions Triangle Theory, but aims to develop it further from an operational point of view, showing how contemporary ecological tax reforms, if inspired by the Capabilities Approach, could more effectively contribute to achieving an inclusive, sustainable, accessible and secure global energy system, that provides solutions to energy challenges and, at the same time, creates value for business and civil society as a whole, without compromising the balance between the three fundamental elements of the tensions triangle described by Wood and Roelich. In particular, this chapter aims to show how the enlargement of the tax area according to new criteria of distributive justice inspired by the Capabilities Approach could serve to increase the mobility of social assets and to develop strategies to adapt public finance systems to the changes produced not only by environmental emergencies, but also by other sudden and adverse phenomena, such as economic crises and significant revenue losses caused by the adoption of non-transparent or harmful tax practices. Finally, the paper considers the proposal to establish taxes on so-called global commons – such as the atmosphere, climate, healthy environment, oceans – and to redistribute their revenue to reduce economic inequalities and poverty