In the current landscape where governments across the industrialised world are juggling fiscal austerity with supporting welfare, the idea of reducing taxes to favour an environmentally sustainable circular economy might seem less relevant. However as Walter Stahel of The Geneva Association demonstrates in this article, sustainable taxation is in fact most relevant to the present situation. He argues that we might be in a once in a generation opportunity to fundamentally re-examine our taxation policies to promote an economy that supports its most important resource: its labour.

- Today’s states are confronted with the challenge of promoting sustainable energies to mitigate rising Sovereign debt, high youth and long-term under-employment, ageing populations, and climate change to name but a few.

- Industrial economies are being confronted with saturated markets for many goods, rising resource prices for materials and energies, a lack of qualified young people and the challenge of competitors in the emerging economies such as China.

- This article promotes a circular economy focused on maintaining the performance, value and quality of exiting stock, in synergy with manufacturing innovative new systems. It is about making the best use of human labour and of a non-taxation of all renewable resources including work.

- A circular economy is a low-carbon, low-resource alternative to the industrial throughput economy, based on the smart management of existing stocks of physical assets with a focus on the utilisation (performance) of goods and infrastructure, in a regional economy of value-preserving loops.

- For the financial services industries, this means paying as much attention to the operation and maintenance of physical assets (stock) through re-use and service-life extension strategies. For example, reflecting added value from manufacturing, and to properly value such life-cycle investment opportunities as Private Finance Initiatives with respect to income guarantee and resource security.

- Such a strategy means new opportunities in the preservation of physical assets over longer periods of time and in loss prevention, as well as new challenges in insuring the utilisation value of goods instead of the residual value. It is about exploiting the chances of the circular economy, one that for example in loss settlements embraces “repair” instead of “replace”.