This policy addresses the vast fiscal and ecological costs of regressive subsidies — particularly fossil fuel and broad consumption subsidies — that benefit wealthier groups and lock economies into unsustainable pathways. Its design involves a transparent inventory of subsidies, phased removal of harmful ones, and reallocation of resources to social protection, renewable energy, and human capital investments. Strong compensation measures, including targeted cash transfers, universal services, and price-smoothing mechanisms, are essential to protect vulnerable groups and build political support.
Implementation requires careful sequencing, public communication strategies, robust monitoring, and international cooperation to avoid competitiveness distortions.
The goal is to free up trillions of dollars in fiscal space while aligning incentives with sustainability and equity.
This policy is desirable because it reduces inequality, enhances fiscal justice, strengthens resilience, and ensures that resources currently sustaining polluting or regressive practices are redirected toward poverty eradication and wellbeing.
