Erika Scuderi
Scuderi, Vienna University of Economics and Business, Austria
The Economics of Space Sustainability
Delivering Economic Evidence to Guide Government Action
7. Use of fiscal measures for addressing space debris
Abstract
Research shows that economic interests and technical difficulties often compromise compliance with soft law instruments adopted to mitigate risks from space debris. This chapter addresses the question of whether fiscal measures can be viable tools to address these concerns and overcome the inherent fragility of non-binding instruments. Leveraging a review of the existing literature and past experiences with the adoption (or proposal) of user fees for launches, this chapter suggests the design of a space debris mitigation tax scheme embedded in a framework of legal and fiscal principles.
Introduction
The application of satellite technologies permeates many aspects of our daily lives (e.g., climate monitoring, weather forecasting, satellite navigation, national security, etc.). As our economy increasingly relies on space activities, it is necessary to ensure that outer space remains a safe and clean environment. The OECD has estimated that the number of satellites launched into orbit in 2021 was greater than the sum of satellites launched in the last decade and that even more are expected to be sent to space in the next five years (OECD, 2022[1]). Debris objects risk colliding with active space objects, thus endangering space missions and people. Researchers have attempted to calculate the actual collision risk over time (Bradley and Wein, 2009[2]; Liou and Johnson, 2006[3]). Despite the uncertainties on a precise estimate of the number of potential collisions, the socio-economic impacts of a major space debris accident would be dramatic due to the potential chain reaction of collisions between debris objects – the so-called Kessler’s Syndrome (Kessler and Cour‐Palais, 1978[4]) – could render some high-value orbits unusable and block access to higher orbits (OECD, 2022[1]; Alfano and Oltrogge, 2018[5]; Oltrogge et al., 2018[6]; Jones and Doostan, 2013[7]; Undseth, 2021[8]; Hoogendoorn, Mooij and Geul, 2018[9]). International organisations and space agencies are working to strengthen debris mitigation guidelines1 and ensure that post-mission disposal (PMD) and active debris removal (ADR) become cheaper and more effective. However, non-binding instruments do not seem to be sufficient to face the challenge raised by space debris (Tapio and Soucek, 2019[10]). According to the OECD (2022[1]), it is necessary to conduct further research to understand which policy instrument is best suited to internalise the costs of space debris and/or incentivise space actors to follow debris mitigation guidelines. In this context, new “standards and market-based instruments such as taxes or insurance” might play a key role.
Research problems, literature review and research questions
Research problem
The congestion of Earth’s orbits is considered a classic example of a tragedy of the commons (Lambach and Wesel, 2021[11]; Salter, 2016[12]) for the resolution of which many proposals relying on advanced technologies have been put forward (Lucas-Rhimbassen, 2019[13]; Mark and Kamath, 2019[14]; Skinner, 2017[15]). Clearly, effective technologies are key, but ‘the core of the space debris problem is incentives, not technology’ (Rao, Burgess and Kaffine, 2020[16]). Indeed, space operators are faced with the question of whether to launch profitable satellites and increase the risk of collision, or not to launch them and leave the profits to competitors. In other words, operators are incentivised to receive the benefits of public goods and common-pool resources without contributing to the costs (Nordhaus, 2015[17]; Adilov, Alexander and Cunningham, 2022[18]). To face this phenomenon referred to as ‘free-riding’, scholars have suggested adopting incentive-based policies (Rao, Burgess and Kaffine, 2020[16]). As in the context of climate change discourses, it is possible to identify three different categories of responses to the problems caused by space debris: Prevention, mitigation and remediation (de Moor, 2021[19]). Based on the strategy pursued, different incentive-based measures (among which, tax-based incentives) can be conceived, as shown in Table 7.1.
Table 7.1. Strategy and incentive-based measures
Research goal and research questions
This contribution leverages the knowledge provided by existing economic, tax and legal literature and takes a further step: It explores the rationale behind introducing a new space debris tax/fee and identifies a framework of principles governing the potential adoption of such a fiscal instrument. It also attempts to answer some debated open issues and highlights remaining concerns. The ultimate goal is to shed some light on the available tax policy designs that could serve the purpose of reducing space debris accumulation while complying with space law principles and safeguarding companies’ competitiveness. To achieve these goals, this chapter answers the following research questions:
1. What are the available policy options? What are their essential features and flaws?
2. What can we learn from past experiences?
3. What are the tax and legal principles that shall inform the design of a space debris tax/fee?
4. What considerations shall the policy makers take into account from the points of view of international fairness and tax competition?
A crucial distinction to be made is between price-based policies (such as taxes and fees), and quantity-based policies (such as permits tradable in the market). The former puts a price on goods or services and lets the market regulate the amount of goods and services provided/offered. The latter fixes the maximum quantity of goods and services available and lets the market establish the price. Although both strategies achieve the objective of internalising externalities, generally economists tend to favour taxes (e.g., carbon taxes) over tradable permits (e.g., emission trading certificates) to fight climate change (Rao, Burgess and Kaffine, 2020[16]). Weitzman suggests that when the marginal costs of abatement are steeper than the marginal benefits of abatement, price-based policies shall be preferred over quantity-based ones (Weitzman, 1974[20]). It is not known yet whether this holds true also in the case of orbital pollution. Adilov et al. showed that “there exists a tax schedule that induces firms to choose the optimal level of launches and debris creation” but stressed that this “is distinct from showing that a Pigouvian tax is a superior, or even desirable, means of remediation” (Adilov, Alexander and Cunningham, 2015[21]). This contribution focuses on price-based policies in an attempt to bridge the existing research gap and explore the related legal constraints.
Literature review
Considering the similarities between terrestrial and orbit pollution (Adilov, Alexander and Cunningham, 2022[18])scholars have investigated the potential application of environmental policies to the outer space environment (see Table 7.2). For example, some authors support the adoption of taxes (Scheraga, 1986[22]; Limperis, 1998[23]; Macauley, 2015[24]; Béal, Deschamps and Moulin, 2020[25]; Guyot and Rouillon, 2023[26]; Adilov, Alexander and Cunningham, 2015[21]) or fees (Taylor, 2011[27]; Rao, Burgess and Kaffine, 2020[16]) as remedies for debris pollution. Others privilege tradable permits (Buchs and Bernauer, 2023[28]; Pecujlic and Germann, 2015[29]; Macauley, 2004[30]; Macauley, 1994[31]), bonds (Adilov, Alexander and Cunningham, 2023[32]), or property rights (Scheraga, 1986[22]; Salter, 2016[12]). Little but important research has been conducted on the potential application of fiscal instruments for the protection of the outer space environment. These studies address the question of the adoption of debris fees/taxes from an economic or legal angle, although with a net predominance of the former. More in detail, scholars’ proposals focus on several aspects of tax policy design, with the main differences relating to (i) the taxable event (ii) the taxable moment, and (iii) the use of the revenue collected.
In particular, as far as the taxable event is concerned, scholars suggest linking the tax to:
1. the access to outer space / putting a space object into orbit
2. the potential risk of debris generation or potential harm to others
3. the mere use of the orbit
4. the actual formation of debris.
Since the taxable event is the occurrence giving rise to the tax liability but not necessarily to the actual tax collection, the tax can be collected by the tax authorities at a different moment. Scholars propose that the tax shall be collected either at the moment of the launch, orbital use or debris formation.
Finally, as for the use of the revenue, scholars suggest spending the funds to:
1. invest in R&D
2. carry out ADR operations
3. both support R&D and carry out ADR operations
4. refund space operators (e.g., upon proof of successful PMD or in support of those whose active space objects have been destroyed or damaged by collisions).
Table 7.2. Literature review summary
Learning from past experiences
The idea of fees imposed on space launches is not new. For example, in 1991, the United States adopted a licence fee and per-launch fees. The rationale for the adoption of such fees was to recover part of the “costs for personnel, contracts, and travel associated with the review of licence applications and issuance and administration of licences” by the Department of Transportation’s (DoT) Office of Commercial Space Transportation (OCST), Licence Program Division (see Proposed Regulations: Commercial Space Transportation; User Fees No. 56 FR 8301 3 (Feb. 28, 1991). Thus, the idea behind them was to recover a portion of the OCST’s costs related to government-provided goods and services that confer benefits on identifiable beneficiaries. More in detail, the OCST introduced a flat licence fee of USD 2 500 per licence application (irrespective of the eventual approval or denial), and a renewal fee of USD 2 500 to be paid on or before the completion of the first year from the date in which the licence was issued (see 14 CFR, Part 415.4 Launch Fee, 1991). Additionally, a launch fee structure was introduced for orbital and suborbital launches. Orbital launches were subject to a fee of USD 2.50 per pound of delivery capability of the launch vehicle to low-earth orbit for each orbital launch. Suborbital launches were subject to a fixed per-launch fee of USD 1 000.2 Pursuant to the National Aeronautics and Space Administration Authorization Act, Fiscal Year 1993 (H.R. 6135, 1992), the DoT repealed these fees with effect of 12 January 1993 (Final Rule. Commercial Space Transportation; Removal of User Fees, Federal Register Vol. 58, No. 7, 1993).
More recently, in 2020, Australia had proposed specific user fees to be paid for domestic launches. In particular, it proposed the adoption of fees in the context of its partial cost recovery scheme under which the government would have charged a fee of approximately USD 189 894 per-launch permit application (Draft cost recovery implementation statement. Fees for activities under the Space (Launches and Returns) Act 2018. 2019-2020). After having been deferred for about two years, the proposal was set aside, and the fees were not introduced. The reason was to provide the industry with certainty and help small and medium-sized enterprises to keep growing.3
In both examples, the fees were justified as being charged to recover costs related to the agencies’ work on the licence applications and not proper space launch taxes. Also, they were not related to debris mitigation at all. However, some lessons can be derived from their design features, the economic impact analyses and the industry’s responses.
First, in both cases, comments on the proposed regulations highlighted competitiveness concerns. In particular, commentators on the 1991 American user fees were concerned that such fees would have adversely affected “the competitive position of the US commercial space transportation industry relative to foreign launch providers” (see Final Rule. Commercial Space Transportation: User Fees No. 56 FR 41062, 19.08.1991). In this respect, some commentators specifically suggested that the U.S. Trade Representatives and the European Space Agency reach an agreement on user fees, thus achieving a level playing field for competitors in the international launch services market before they were unilaterally imposed on American commercial launch providers (Final Rule. Commercial Space Transportation: User Fees No. 56 FR 41062, 19.08.1991). Similarly, the Australian industry representatives described the proposed Australian fee as threatening the competitiveness of the domestic industry and “grossly disproportionate to other like-minded spacefaring nations” (Southern Launch, Submission to the Standing Committee on Industry, Innovation, Science and Resources for the Inquiry into Developing Australia’s Space Industry, No. Submission 46, 2021, at 27).
Moreover, the OCST conducted an analysis of the economic impact of the adopted used fees and concluded that, as they were designed, they represented “a very small fraction of the total revenues derived from a launch operation” and were “not expected to have a negative impact on the rate growth of the commercial space launch industry or the financial viability of any of the existing firms in the industry” (see Final Rule. Commercial Space Transportation: User Fees No. 56 FR 41062 3). The office specified that it welcomed efforts to reduce the cost of access to space but that it did not expect the rule to have “a seriously adverse impact on the costs of any individual launcher or on those of the commercial launch industry”. ((Final Rule. Commercial Space Transportation: User Fees No. 56 FR 41062 3, at 7). The risk assessments conducted by the Australian Space Agency concluded that there was a risk that the cost recovering fees for overseas payload permits (particularly to small businesses and academic organisations) might have been “a disincentive to space participation” but that such risk was mitigated “through the design of the models” that was related “directly to work undertaken” (Draft cost recovery implementation statement. Fees for activities under the Space (Launches and Returns) Act 2018. 2019-2020 10). In the United States, it was suggested not to use the revenue to recover the costs incurred to grant licences to space companies but to channel it through a trust fund and use it for “some worthy purpose that might benefit the industry” (Memorandum of the Hearing on Fiscal Year 1992 NASA Authorization for Space Transportation. HSY065020, 1991), for example to improve the launch facilities and infrastructure technologies which improve the performance or reduce the cost of commercial launch vehicles (Hall, 1991[33]). Such experiences, along with past literature on the topic, help to understand which concerns the policy maker has to keep in mind when developing a new space debris tax or fee.
Framework of principles and assessment criteria
The purpose of this chapter is to identify the essential elements of the fiscal policy option that appear best suited to serve the purpose of mitigating risks from space debris generation. A robust and implementable policy needs to be embedded into a framework of legal and tax principles deriving from international (public and space) law principles, and principles of taxation, as presented in Table 7.3.
Table 7.3. Framework of principles
To determine which policy option is best suited to serve the purpose of a space debris tax and/or fee, the author has selected some criteria against which tax policy options shall be tested:
1. Legal implications: Impacts on space and tax law principles.4
2. Economic implications:
a. Private entities’ perspective: Convenience, competitiveness.
b. States’ perspective: Potential impact on the budget.
3. Behavioural implications: Incentive for a behavioural shift towards more environmentally friendly solutions.
As for the economic implications, the moment of tax collection plays a key role as from the tax collector’s point of view it is preferable that it is linked to an event certain and definite. Also, a deferred tax collection can bring the risk of bankruptcy that jeopardises the effective collection of the revenue. The contrary would be true from the taxpayer’s perspective as “immediate” tax collection could put an additional economic burden on the companies’ shoulders, while “deferred” tax collection could give them time to be profitable before paying any taxes/fees. This chapter favours the taxpayers’ interests first, as it relies on the assumption that the tax policy measure to be adopted shall not hinder companies’ competitiveness. Clearly, states can adopt different views and make different political choices or can decide to incentivise competitiveness by using other non-fiscal instruments. From the states’ perspective, solutions that require additional state resources to cover either new expense (e.g. refunds) or a decrease in revenue collected (e.g. tax incentives) shall either address the need for the state to find such resources (e.g. through the increase of other existing sources of revenue or the cut of other expenses) or shall be combined with policies raising new resources (e.g. taxes or fees). Finally, as per the behavioural criterion, tax policy options incentivising behavioural changes towards the implementation of more sustainable and safe spacecraft designs, or the completion of PMD and ADR activities are preferred over options that do not stimulate such positive behavioural effects as the achievement of the primary goal of the measure is subject to a behavioural shift.
Proposal for a space debris mitigation fiscal scheme
The design of policy options analysed in the literature might raise uncertainties regarding their effects on the freedom of access to space, the production of positive behavioural change towards ADR, as well as the risk of tying the moment of taxation to an event that is difficult to ascertain and would make the assessment and collection of the tax unclear. Therefore, it is possible to think of a further variant combining elements of the different proposals, which does not jeopardise the possibility of access to the space and brings the desired behavioural change. The proposal for a Space Debris Mitigation Fiscal Scheme (SDMFS) composed of an orbiting debris tax/fee (ODT) and a tax credit for PMD and ADR is embedded in the framework of principles above identified (see Figure 7.1).
Goal of the measure
In the tax and public policy literature, scholars have long debated the purpose of the tax system. In a fascinating paper, Avi-Yonah has answered the question of what taxes are for (Avi-Yonah, 2006[34]). He describes the three goals of taxation: The need to raise revenue for necessary governmental functions, the redistributive function, and the regulatory function. The design of a tax measure can be tailored in a way that best achieves the objective pursued. Consequently, the design of a space debris tax may vary if the main objective of the measure is raising revenue, redistributing wealth or achieving other regulatory goals (such as mitigating orbit pollution). The author suggests that, among the potential goals of the ODT, the objective shall be (1) the internalisation of negative externalities stemming from commercial space activities through a price (the tax and/or fee) imposed on the polluting event (i.e., putting new satellites in orbit thus increasing the risk of debris formation) – and (2) incentivising the removal of existing debris through the tax credit.5 Such a fiscal measure would thus have a regulatory purpose. The rationale of the SDMFS lies in the price put on each unit of polluting activity identified in the space objects’ launches, being the prerequisite for the formation of debris.
Level of design, implementation, assessment, collection and right to use the revenue
Although the delineation of the ideal level of administration and collection of such a tax is beyond the scope of this research, it is worth mentioning that four main approaches might be envisaged:
1. Design, implementation, assessment, collection and right to use the revenue entirely managed at the international level by a supranational authority.
2. Design, implementation, assessment, collection and right to use the revenue entirely managed at a national level by each state.
3. International agreement on the design of the tax, but domestic implementation, assessment, collection and right to use the revenue.
4. International agreement on the design of the tax, but domestic implementation, assessment and collection. The revenue is transferred to a supranational body.
All these approaches have advantages and drawbacks, as explained below. The first option would entail giving an international tax administration (that at present does not exist) the power to design, implement, assess the tax and collect and use the revenue. Such a solution poses the question of the transfer of tax sovereignty to this authority, the consensus for which, as known, is very difficult to reach. The same would hold true in the case of a European space debris tax (on the difficulties linked to the adoption of a European environmental tax, see Scuderi (2022[35])).
The idea of creating a new international body for the administration of international taxes has already been explored in the literature (Adolph, 2006[36]; Tanzi, 2016[37]; Morin and Richard, 2021[38]). Scholars have discussed the potential need for a regulatory agency to have the duty – more generally – to protect the space environment, manage potential conflicts, and safeguard the interests of developing countries (Adolph, 2006[36]; Jakhu, Nyampong and Tommaso Sgobba, 2017[39]; Bernhard, 2023[40]), or called for a global tax authority to administer general global tax issues (Tanzi, 2016[37]). In the space debris context, given the global reach of the problem, global actions seem to be best suited to tackle the problem effectively, while unilateral actions might not be sufficient in the long run (Salter, 2016[12]; Morin and Richard, 2021[38]). In their analysis of the potential use of tax policies to govern global commons, Morin and Richard (2021[38]) highlighted that the absence of a global government having both the legitimacy and the necessary authority to levy taxes represents the main obstacle for debris mitigation. In fact, building on the work conducted by Ostrom (1990[41]), they concluded that a purely global tax might not be necessary to tackle the problem of space debris and that solutions could be based on the existing polycentric nature of space governance. On the other hand, Jakhu (2017[39]) proposed the establishment of an international regulatory regime and an international organisation to undertake ADR and on-orbit servicing activities. They suggest that state parties may be required under such agreement to collect a domestic ‘space-garbage-collection’ tax on the final users of space-based commercial services in their jurisdictions, to be imposed as a fee for the issuance of a launch licence by a national regulatory entity of a state party (Jakhu, Nyampong and Tommaso Sgobba, 2017[39]). Hobe envisages a legal regime that poses the responsibility to pay a fee to an international fund upon the launch of each space object (Hobe, 2023[42]).
The second solution would be easier to implement, at least in principle. It would entail keeping the design, implementation, assessment, collection and right to use the revenue at the domestic level, hence not requiring any transfer of sovereignty and setting aside the difficulties of finding international consensus. However, due to the global scope of the externality associated with space debris, unilateral action by individual spacefaring nations might not be the most efficient solution. Unilateral actions could lead to different tax policies having diverse scopes, requirements, and levels of taxation. The inhomogeneity stemming from such different domestic solutions would increase the level of complexity and uncertainty, and the possible different tax rates (as well as the possibility for certain states not to introduce any tax) would add a new element of tax unfairness and potentiality tax competition.
The third solution would leave only the design of the tax policy in the hands of an international organisation, with the actual implementation, collection and right to use the revenue at the national level. This option combines the advantage of co-operating at the international level for the design of the tax measure (which would eliminate the problems arising from the potentially different tax models) and the advantage of not transferring tax competencies to a supranational organisation (which could render the adoption of the tax much easier and quicker). This solution shares these features with the fourth one. The only difference is the destination of the revenue. In the third option, countries retain the revenue collected and might decide whether to earmark it based on their domestic policies and goals.
A different approach is suggested by the fourth option, where an international body is responsible for the design of the tax to be implemented and collected at the national level; the international body is then funded by states in order for it to undertake ADR services.
In the context of other areas of environmental policy, empirical studies show that a co-ordinated tax for many countries would lead to substantial cost-savings for taxpayers and tax administrations and would lead to CO2 emissions reductions at a lower rate and smaller costs (Barker, 1999[43]; Conrad and Schmidt, 1998[44]). Assuming that this holds true also in the area of debris mitigation, an international agreement on the critical elements of the tax could be of utmost necessity.
The proposed SDMFS endorses solution number 3, by virtue of which the essential elements of the tax policy are agreed at the international level, so as to avoid great differences in terms of if and how the policy is realised. The actual implementation, assessment and collection of the tax is left to states. The revenue collected is suggested to be kept by the states and used for achieving the goals of the SDMFS in order to create an additional incentive for states to co-operate in developing such a solution. This solution could be implementable in a relatively short term, considering that it does entail the establishment of a new international organisation or the identification of which among the existing international organisations could pool funds and use them to carry out space debris removal activities. Finally, considering that states retain jurisdiction and control over space objects launched from their territories, any removal operation carried out by an international organisation would require the specific prior consent of the state of registration, bringing the necessity to amend the Liability Convention and the Outer Space Treaty to surrender a portion of state jurisdiction relating to the control of space objects for debris removal. The suggested option number 3 would not need such additional efforts (it shall, however, be considered, that organisations such as the European Space Agency might act as the state of registration, raising the question of which body would be entitled to raise and collect the tax).
Taxpayers
Although governmental space activities produce debris, governments are not considered taxpayers for the purposes of the SDMFS. Only private commercial space actors would be subject to the SDMFS. Some space launches can bring into orbit more than one space object, possibly owned by different actors (e.g., space companies, individuals, research institutions, or other entities). In these cases, the tax shall be determined for each space object carried into orbit, as each of them poses a different risk of debris creation. The taxpayers are thus the owners of such space objects. Caution should be paid to cases where the space object has a dual use (governmental and non-governmental). A solution could be to modulate the tax to reflect the ownership share of private entities.
Taxable event and tax base
As already mentioned, the essential elements of the SDMFS shall be agreed upon internationally. In this context, since the main objective of the tax measure is the mitigation of risks arising from debris formation and collisions, the international agreement may stipulate that the taxable event is an expression of the risk posed by the launch of a new satellite that is expressed in the licence application for the launch of the space object.
The same logic applies to the determination of the tax base. The international agreement may stipulate that it is an expression of the risk posed by putting a new satellite into orbit. At the state level, each state could use different parameters to determine this risk (e.g., mass at launch, payload lifting capacity, mission costs), as long as the chosen criterion is an expression of the risk of debris formation. In the literature, it has been suggested to levy the tax as a percentage of the launch costs or the total mission costs for putting the satellite into orbit (Bilaney, 2021[45]). This option might be explored as the launch costs reflect the dimensions and the payload capacity. However, it should be taken into account that a single launch vehicle can carry several space objects owned by different space companies. Therefore, it would be necessary to either determine the tax based on the costs associated with the launch of the vehicle as a whole or to split the calculation based on each payload carried into space.
Tax rate
Optimal tax theory suggests that the tax rate should be high on goods and services with a low price elasticity, and low on goods and services with a high price elasticity. This means that before setting the rate of the tax, it is necessary to determine the level of elasticity of demand and supply of the specific object of taxation, being it the launch of satellites. Even though the calculation leading to the determination of the applicable tax rate is outside the scope of this chapter, it is worth mentioning the outcome of past research on this topic.
In the economic literature, Béal, Deschamps and Moulin (2020[25]) address the question of whether the tax should be linear or nonlinear and conclude that a flat tax is better than a progressive tax. In the context of the SDMFS, setting a flat rate would be a viable solution if the tax base is determined in a way that already expresses the risk of debris formation effectively. Otherwise, a percentage range should be identified, and the tax rate could be lower for launches that pose fewer risks, and higher for launches that pose more risks. As far as the calculation of the tax rate percentage, Rao et al. (2020[16]) suggest adopting an internationally harmonised “orbital-use fee” (OUF) in the form of a Pigouvian tax. They estimate that “the optimal OUF starts at roughly USD 14 900 per satellite-year and escalate at roughly 14% per year […] to around USD 235 000 per satellite-year in 2040.” Based on their model projects, the application of an orbital fee would increase the space industry’s net present value from around USD 600 billion under a business-as-usual scenario to around USD 3 trillion, bringing about a more than four-fold increase in the value of the space industry. In contrast, Davis (2021[46]) notes that “the increase in value does not reflect the concentration of that value across space programmes worldwide”.
All these factors must be considered when determining the tax rate. The few – but important – economic studies conducted in this area might serve as a basis for further research on the potentially applicable tax rate of the suggested SDMFS. The tax policy makers shall evaluate the flat tax ‘fairness’ based on several factors, considering the overall goal of the SDMFS. In fact, since the objective of the measure is to mitigate the risks stemming from debris collision, the measure should be designed in a way that reflects such risks. If the taxable base takes this into account, the tax rate does not necessarily need to be proportional to the risk produced. If the taxable base does not reflect the risk, then it would be appropriate to module the tax rates based on the risk brought about by the specific space object launched. Notably, this latter option would be more difficult to govern from an administrative perspective.
Moment of tax collection
When the licence to launch is requested, a liability to pay a tax for the use of the orbit arises. Since obtaining a licence is mandatory for the launch to happen, linking the event giving rise to the obligation to pay the tax/fee to such a moment can ensure a high degree of “certainty” of the measure. A few considerations are necessary in this respect. As history has shown, applying a tax and/or fee at an initial stage might constitute an element of concern for the industry because the additional burden can potentially lead to less competition, less innovation and less growth.
To avoid introducing an obstacle to the free use of space, the actual collection of the tax/fee might either happen through instalments (i.e., the total amount due is set at the moment in which the licence is requested, with payment of the first instalment, but the other instalments are paid periodically), or through a periodic tax (i.e., the amount to be paid is assessed each year based on a re-evaluation of the risk posed by the space object) or simply be deferred to a later moment identifiable in the registration of the object. The first option provides the certainty required by the framework or principles identified since it sets the total amount of tax/fee due at the moment of the licence application. Additionally, it gives the taxpayer a longer time to actually pay the fiscal debt. To face the risk of bankruptcy which would render the collection impossible, interest rates can apply, or the state can require the taxpayer to include the cost of the tax/fee in the insurance coverage. The second option has been suggested in the literature (Buchs, 2020[47]). Although interesting, it would not give the taxpayer a clear ex ante overview of the tax liability connected to the launch. In addition, it would still be sensitive to the possibility of bankruptcy.
Both downsides can be overcome. The first is a common element of periodic taxes. The second could be minimised through interest rates or insurance policies. The positive side of the periodical tax is that it could better reflect the actual risk of debris formation at every re-evaluation. The third option would link the collection of the tax to the registration of the space object. The issues related to the registration of space objects are well-known in the literature (Jakhu, Jasani and McDowell, 2018[48]). The fact that registration is sometimes delayed or does not occur at all is a factor to be taken into consideration when evaluating this option. However, linking the duty to register the space objects launched from a state with its taxing rights might (perhaps) encourage greater compliance with the Registration Convention. As a final note, if the Registration Convention were amended so as to make the registration mandatory by a certain deadline after the launch, such concerns would disappear.
The use of revenue collected: The tax credit
The SDMFS entails the combination of the ODT with a mechanism that encourages companies to actively remove debris and clean space from their space object once it becomes unusable (Drago, 2019[49]). This might take the form of a refund or a tax incentive to be granted upon proof of PMD or ADR. The great advantage of the use of tax incentives or refunds in mitigation policies is that they provide a direct incentive for taxpayers to act for the removal of space debris. This chapter suggests the potential adoption of a tax credit designed in a way that encourages prompt debris removal. To achieve this goal, the generosity of the credit shall be higher in the first year(s) following the end of the operations or “death” of the space object and shall decrease over time. In other words, the shorter the time between the moment the space object becomes unusable and the moment it is removed, the higher the percentage of the tax credit.6 If the object is not promptly removed, the taxpayer will still pay the tax, the liability of which arose at the moment of the licence request but might not get part of, or the whole tax credit.
Figure 7.1. Space debris mitigation fiscal scheme
Notes: PMD=post-mission disposal, ADR=Active debris removal.
In order for such a measure to be effective, some conditions must exist. First, ADR technologies shall prove to be effective and reliable. Currently, no ADR mission has ever been carried out. The first launch is scheduled to depart starting the second half of 2026 from Europe’s spaceport in French Guiana (Spacewatch Global, 2023[50]). Thus, before implementing a measure that relies on ADR missions, it is necessary to verify that such activities can effectively be carried out. Second, these technologies must be cheap enough to be affordable for space companies, otherwise compromising their ability to get such in-orbit services (Colvin, Karcz and Wusk, 2023[51]; Foust, 2023[52]; Yamamoto and Okamoto, 2017[53]). In addition, further frictions concern the responsibility of the launching state and issues of jurisdiction and control that imply that states must give their consent to ADR if conducted by other companies and/or states.7 Considering these shortcomings, during the initial phase of the implementation of the SDMFS, the tax credit could be granted following PMD (without considering ADR) or ex ante for a higher abatement of research and development costs to stimulate innovation in research for ADR activities or used to directly conduct such ADR activities until the private sector can afford it.
The use of the revenue collected might play an important role in obtaining political approval to raise taxes aimed at financing specific policy goals. In this regard, budget earmarking could be useful. Hypothecation or earmarking links the revenue collected through a tax to a specific expenditure (Burton and Sadiq, 2013[54]; Surrey and McDaniel, 1985[55]; Stewart, 2022[56]; Kotha, 2023[57]). Although green budgeting is the ‘least well advanced of ethical or values-based approaches to the budget’ (Stewart, 2022[56]) it is considered to have the potential to support governments in a long-term reorientation of tax and expenditure approaches for fiscal sustainability (Stewart, 2022[56]). Earmarking the revenue collected through the tax to expenditures for space cleanup or financing R&D can prove to be a successful policy choice for two main reasons. First, the tax expenditure could directly contribute to the achievement of the objective of the levy if the funds are used to pay for a debris cleanup mission. Second, the tax expenditure can also indirectly contribute to the achievement of the purpose of the levy if the funds are used to finance R&D activities finalised at (i) designing more “environmentally friendly” space objects and (ii) providing cost-effective and cost-efficient ADR mechanisms. If governments decide to adopt new tax incentives, close attention shall be paid to the potential impact of the rules included in the legislations implementing the OECD “Pillar Two” (Scuderi, 2024[58]).
Expected consequences and considerations
Considerations on the level of taxation and the generosity of the tax credit
Based on the above, some considerations on the level of taxation and the generosity of the tax credit are needed. First, the goal of the SDMFS is to mitigate the risks stemming from debris collisions. However, the specific objectives of the two fiscal measures slightly differ from each other, otherwise compromising the overall goal. More in detail, the goal of the ODT is to raise the necessary revenue to fund the tax credit and/or ADR activities. If the goal of such a tax was to bring a behavioural shift toward more environmentally friendly attitudes, its tax rate should be set at a rate high enough to effectively discourage new launches. Notably, higher tax rates decrease the rate of debris creation (Adilov, Alexander and Cunningham, 2020[59]). However, this is not the intention of the author’s proposal. The assumption is that launches shall not be discouraged as competitiveness shall not be hindered by the introduction of the new levy. Thus, the tax rate shall be enough high to raise the necessary revenue to achieve the overall goal of the SDMFS but not too high to discourage new launches.
Second, tax policy makers shall carefully consider whether the revenue collected has to be earmarked or not. If earmarked, they shall evaluate for which purpose. On the one hand, a broad and ambitious goal encompassing the provision of a tax incentive and the deployment of ADR would be the gold standard. However, it might risk requiring a too high amount of revenue to cover the costs. This could kill the development of the commercial industry. On the other hand, a too narrow and less ambitious goal encompassing, for example, a minor tax credit for PMD or ADR would not be able to gain traction and bring the behavioural change desired as the incentive coming from the (low) tax credit would not be “worth” the high expenses necessary to conduct PMD or ADR activities.
Potential unfairness in the assignment of taxing rights
Some might argue that if such taxes are paid in the jurisdiction where the launch occurs, the taxing rights would be allocated to a handful of countries having launching capabilities. In the author’s view, the assignment of taxing rights to the launching state can be seen as a sort of ‘compensation’ for its responsibility under the liability convention.8 In particular, if there is more than one launching state, the state of registration would take precedence and retain taxing rights. Furthermore, the revenue would be used to address a global issue (i.e., space debris) for the benefit of all states. If successful, the SDMFS makes the orbit ready to accommodate other states’ satellites, so the collection of revenue from some states right now could be seen as a way of supporting the restoration and preservation of the global commons.
The mentioned approach of hypothecation and/or earmarking could mitigate the concerns surrounding the potential unfairness of the tax and gain political support for its implementation. For the sake of argument, it can also be said that the reason why taxing rights are in the hands of the launching state is because this state is responsible for the damages caused by the objects launched from its territories. This would mean that in case of damage, the launching state can be held responsible. Assigning taxing rights to the launching state can be seen as a sort of ‘compensation’ for this liability. However, this argument might have a flaw. In fact, according to Article VII OST and Article I of the Liability Convention, the ‘launching state’ is not only the state from whose territory a space object is launched but also the state (i) that launches, (ii) that procures the launching and (iii) from whose facility a space object is launched. This means that for the same launching from which damage occurs, more than one state can be identified as a launching state based on different grounds, thus being all jointly liable for such damage. Therefore, this being the case, attaching taxing rights only to one of these states could be perceived as unfair. Ways of mitigating such unfairness can be explored.
Tax competition among states and companies
It might be argued that if the tax measure is adopted only by certain countries, it might constitute an incentive for space companies to relocate their launch activities to those countries where the tax/fee is not due. This would introduce a new factor of tax competition. In this respect, it shall be noted that not all launching pads can accommodate every single type of launch. In fact, the choice of the spaceport depends on a number of factors that are unrelated to tax rules (e.g., the type of mission to be carried out, targeted orbit, etc.). This means that – at least at present – there seems to be very little room for tax competition among states. This might change in the future if more spaceports with similar launching capabilities are built in countries that raise such taxes and in countries that do not. The main risk caused by the non-co-ordination of fiscal measures on launches is the disadvantageous position space actors would find themselves in if they can only launch from a given state if that state imposes a levy and other states do not. The additional cost that these actors would have to bear would put them at a competitive economic disadvantage vis-à-vis other space actors abroad, risking threatening their business and slowing down the development of research, innovation, and the space market in general, which, as Weinzierl points out, is made of complementarity and co-ordination between various segments of the sector (Weinzierl, 2018[60]).
Conclusions
This chapter reviewed the existing literature discussing fiscal-based policies for space debris mitigation and tested four different tax policies against specific criteria identified by the author. Some lessons from past experiences remind us of specific concerns that tax policy makers shall address when designing a tax/fee that addresses space launches. Based on this review, the author suggested a framework of principles within which a proposal for a Space Debris Mitigation Scheme is embedded. The proposal envisages the adoption of a tax and/or fee connected to the actual risks stemming from debris formation. By linking the tax/fee to such risks, the domestic tax policy makers have ample room for designing the essential elements of the tax in a way that is compatible with their domestic tax system and constitutional framework, and that is fair and equitable. In the proposal, such tax/fee is complemented by a tax credit granted upon proof of PMD or ADR. Such tax credit shall be designed in a way that encourages prompt disposal and/or removal of the space object once it becomes unusable or debris. Alternative options to the tax credits are also suggested.
Some areas would need further investigation. In particular, research is needed to estimate the elasticity of the demand and supply in the launch industry and the applicable tax rate, or at least its range. Also, the identification of the taxable base needs to be supported by economic studies.
Moreover, the chapter did not discuss the possibility of launching from outer space or the high seas. This aspect shall be evaluated in the design of the measure to include an umbrella clause for situations in which the launch happens from territories in which countries do not have sovereignty. In any case, as a launching state has to be identified for every launch in order to assign jurisdiction, control, liability and responsibility for damages, these situations do not seem at first sight to pose particular issues. Clearly, a deeper investigation is needed to confirm this statement.
From a legal perspective, the modification of the Registration Convention to include a mandatory deadline for the registration of the space objects could ease the connection between the moment of tax collection and such registration.
Additionally, although this proposal advocates for a domestically implemented measure, it does not forget that space debris is a global concern and global actions could be the most desirable outcome. In this respect, further studies on the legal basis for an international action could be conducted. For example, if an international body has to be set up, it would be interesting to explore the possibility of creating coalitions similar to the “Climate Clubs” envisaged by Nordhaus (Nordhaus, 2015[17]), or adopting a rule similar to Article 82 United Nations Convention on the Law of the Sea (Bird and Mintz, 2019[61]; Burch, 2019[62]). Last, but not least, tax policies are only one tool at the disposal of governments to tackle the challenges brought about by space debris. It would be worth exploring the combination of fiscal policies with other market-based instruments, such as a cap-and-trade system similar to the EU Emission Trading System (Bullock and Johanson, 2021[63]; Rao, Burgess and Kaffine, 2020[16]).
Endnotes
References
[32] Adilov, N., P. Alexander and B. Cunningham (2023), “The economics of satellite deorbiting performance bonds”, Economics Letters, Vol. 228, https://doi.org/10.1016/j.econlet.2023.111150.
[18] Adilov, N., P. Alexander and B. Cunningham (2022), “Understanding the Economics of Orbital Pollution Through the Lens of Terrestrial Climate Change”, Space Policy, Vol. 59, p. 101471, https://doi.org/10.1016/j.spacepol.2021.101471.
[59] Adilov, N., P. Alexander and B. Cunningham (2020), “The Economics of Orbital Debris Generation, Accumulation, Mitigation and Remediation”, Journal of Space Safety Engineering, Vol. 7/3, pp. 447-450, https://doi.org/10.1016/j.jsse.2020.07.016.
[21] Adilov, N., P. Alexander and B. Cunningham (2015), “An Economic Analysis of Earth Orbit Pollution”, Environmental and Resource Economics, Vol. 60/1, pp. 81-98, https://doi.org/10.1007/s10640-013-9758-4.
[36] Adolph, J. (2006), “The Recent Boom in Private Space Development and the Necessity of an International Framework Embracing Private Property Rights to Encourage Investment”, The International Lawyer, Vol. 40/4, pp. 961-985, www.jstor.org/stable/40708019.
[5] Alfano, S. and D. Oltrogge (2018), “Probability of Collision: Valuation, variability, visualization, and validity”, Acta Astronautica, Vol. 148, pp. 301-316, https://doi.org/10.1016/j.actaastro.2018.04.023.
[34] Avi-Yonah, R. (2006), “The Three Goals of Taxation”, Tax Law Review, https://doi.org/10.2139/ssrn.796776.
[43] Barker, T. (1999), “Achieving a 10% Cut in Europe’s CO2 Emissions Using Additional Excise Duties: Coordinated, Uncoordinated and Unilateral Action Using the Econometric Model E3ME”, Economic Systems Research, Vol. 11/4, pp. 401-422, https://doi.org/10.1080/09535319900000029.
[25] Béal, S., M. Deschamps and H. Moulin (2020), “Taxing congestion of the space commons”, Acta Astronautica, Vol. 177, pp. 313-319, https://doi.org/10.1016/j.actaastro.2020.07.036.
[40] Bernhard, P. (2023), “Large satellite constellations and space debris: Exploratory analysis of strategic management of the space commons”, European Journal of Operational Research, Vol. 304/3, pp. 1140-1157, https://doi.org/10.1016/j.ejor.2022.04.030.
[45] Bilaney, S. (2021), “A Tax to Ensure Space Sustainability”, Tax Notes International, www.taxnotes.com/lr/resolve/tax-notes-international/a-tax-to-ensure-space-sustainability/784hw.
[61] Bird, R. and J. Mintz (2019), “Sharing the Wealth: Article 82 of UNCLOS-The First Global Tax?”, British Tax Review 4, www.sweetandmaxwell.co.uk/Product/Taxation-Law/British-Tax-Review/Journal/30791232.
[2] Bradley, A. and L. Wein (2009), “Space debris: Assessing risk and responsibility”, Advances in Space Research, Vol. 43/9, pp. 1372-1390, https://doi.org/10.1016/j.asr.2009.02.006.
[47] Buchs, R. (2020), “Pricing space junk: A policy assessment of space debris miitgation and remediation in the new space era”, Master’s thesis, ETH Zurich, www.research-collection.ethz.ch/bitstream/handle/20.500.11850/481152/RomainBuchs-Masterthesis-Pricingspacejunk.pdf?sequence=1&isAllowed=y.
[28] Buchs, R. and T. Bernauer (2023), “Market-based instruments to incentivize more sustainable practices in outer space”, Current Opinion on Environmental Sustainability, Vol. 60, https://doi.org/10.1016/j.cosust.2022.101247.
[63] Bullock, C. and R. Johanson (2021), “Policies for Incentivising Orbital Debris Assessment and Remediation”, MIT Science Policy Review, Vol. 2, pp. 8-14, https://doi.org/10.38105/spr.16gdw8z5d4.
[62] Burch, M. (2019), “Extranational Taxation: Canada and UNCLOS Article 82”, Canadian Tax Journal/Revue fiscale canadienne, Vol. 67/3, pp. 729-753, https://ssrn.com/abstract=3461831.
[54] Burton, M. and K. Sadiq (2013), Tax Expenditure Management, Cambridge University Press.
[51] Colvin, T., J. Karcz and G. Wusk (2023), “Cost and Benefit Analysis of Orbital Debris Remediation”, NASA, www.nasa.gov/wp-content/uploads/2023/03/otps_-_cost_and_benefit_analysis_of_orbital_debris_remediation_-_final.pdf.
[44] Conrad, K. and T. Schmidt (1998), “Economic Impacts of an Uncoordinated Versus a Coordinated Carbon Dioxide Policy in the European Union: An Applied General Equilibrium Analysis”, 10.1080/09535319808565472, Vol. 10/2, pp. 161-182, https://doi.org/10.1080/09535319808565472.
[46] Davis, I. (2021), Orbital Use Fees Stifle Developing Space Programs, Socio-technical research paper presented to the faculty of the School of Engineering and Applied Sciencde, University of Virginia, https://libraetd.lib.virginia.edu/downloads/br86b4355?filename=Davis_Ian_STS_Research_Paper.pdf.
[19] de Moor, J. (2021), “Postapocalyptic narratives in climate activism: their place and impact in five European cities”, Environmental Politics, Vol. 31/6, pp. 927-948, https://doi.org/10.1080/09644016.2021.1959123.
[49] Drago, S. (2019), “No Man’s Sky: Utilizing Maritime Law To Address The Need For Space Debris Removal Technology”, Santa Clara Law Review, Vol. 389, https://digitalcommons.law.scu.edu/lawreview/vol59/iss2/3.
[52] Foust, J. (2023), NASA Study Assesses Costs and Benefits of Orbital Debris Removal, 13 March, https://spacenews.com/nasa-study-assess-costs-and-benefits-of-orbital-debris-removal/.
[26] Guyot, J. and S. Rouillon (2023), “Sustainable management of space activity in low Earth orbit”, Journal of Environmental Economics and Policy, pp. 1-25, https://doi.org/10.1080/21606544.2023.2231402.
[33] Hall, R. (1991), Letter in Response to the Announcement of Commercial Space Transportation User Fees (Apr).
[42] Hobe, S. (2023), Space Law, oHG/Hart Publishing.
[9] Hoogendoorn, R., E. Mooij and J. Geul (2018), “Uncertainty propagation for statistical impact prediction of space debris”, Advances in Space Research, Vol. 61/1, pp. 167-181, https://doi.org/10.1016/j.asr.2017.10.009.
[48] Jakhu, R., B. Jasani and J. McDowell (2018), “Critical issues related to registration of space objects and transparency of space activities”, Acta Astronautica, Vol. 143, pp. 406-420, https://doi.org/10.1016/j.actaastro.2017.11.042.
[39] Jakhu, R., O. Nyampong and T. Tommaso Sgobba (2017), “Regulatory Framework and Organization for Space Debris Removal and on Orbit Servicing of Satellites”, Journal of Space Safety Engineering, Vol. 4/3-4, pp. 129-137, https://doi.org/10.1016/j.jsse.2017.10.002.
[7] Jones, B. and A. Doostan (2013), “Satellite collision probability estimation using polynomial chaos expansions”, Advances in Space Research, Vol. 52/11, pp. 1860-1875, https://doi.org/10.1016/j.asr.2013.08.027.
[4] Kessler, D. and B. Cour‐Palais (1978), “Collision frequency of artificial satellites: The creation of a debris belt”, Journal of Geophysical Research: Space Physics, Vol. 83/A6, pp. 2637-2646, https://doi.org/10.1029/ja083ia06p02637.
[57] Kotha, A. (2023), “Earmarking of taxes for disruption and recovery”, in De Cogan, D., A. Brassey and P. Harris (eds.), Tax Law in Times of Crisis and Recovery, Hart Publishing, An Imprint of Bloomsbury Publishing.
[11] Lambach, D. and L. Wesel (2021), “Tackling the space debris Problem: A global commons perspective”, Proc. 8th European Conference on Space Debris (virtual), European Space Agency Space Debris Office, https://conference.sdo.esoc.esa.int/proceedings/sdc8/paper/230/SDC8-paper230.pdf.
[23] Limperis, P. (1998), “Orbital Debris and the Spacefaring Nations: International Law Methods for Prevention and Reduction of Debris, and Liability Regimes for Damage Caused by Debris [Note]”, Arizona Journal of International and Comparative Law, http://hdl.handle.net/10150/659313.
[3] Liou, J. and N. Johnson (2006), “Risks in Space from Orbiting Debris”, Science, Vol. 311/5759, pp. 340-341, https://doi.org/10.1126/science.1121337.
[13] Lucas-Rhimbassen, M. (2019), “Conceptual Model for a Profitable Return on Investment from Space Debris as Abiotic Space Resource”, Proceedings of the 8th European Conference for Aeronautics and Space Sciences, Madrid, Spain.
[24] Macauley, M. (2015), “The economics of space debris: Estimating the costs and benefits of debris mitigation”, Acta Astronautica, Vol. 115, pp. 160-164, https://doi.org/10.1016/j.actaastro.2015.05.006.
[30] Macauley, M. (2004), “Regulation of the Final Frontier”, Regulation, https://ssrn.com/abstract=505624.
[31] Macauley, M. (1994), “Close Encounters of the Trash Kind”, Journal of Policy Analysis and Management, Vol. 13/3, pp. 560-564, https://doi.org/10.2307/3325392.
[14] Mark, C. and S. Kamath (2019), “Review of Active Space Debris Removal Methods”, Space Policy, Vol. 47, pp. 194-206, https://doi.org/10.1016/j.spacepol.2018.12.005.
[38] Morin, J. and B. Richard (2021), “Astro-Environmentalism: Towards a Polycentric Governance of Space Debris”, Global Policy, Ltd 2021)., pp. 568-573, https://doi.org/10.1111/1758-5899.12950.
[17] Nordhaus, W. (2015), “Climate Clubs: Overcoming Free-riding in International Climate Policy”, American Economic Review, Vol. 105/4, pp. 1339-1370, https://doi.org/10.1257/aer.15000001.
[1] OECD (2022), Earth’s Orbits at Risk: The Economics of Space Sustainability, OECD Publishing, Paris, https://doi.org/10.1787/16543990-en.
[6] Oltrogge, D. et al. (2018), “A comprehensive assessment of collision likelihood in Geosynchronous Earth Orbit”, Acta Astronautica, Vol. 147, pp. 316-345, https://doi.org/10.1016/j.actaastro.2018.03.017.
[41] Ostrom, E. (1990), Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University Press.
[29] Pecujlic, A. and S. Germann (2015), “Global Cap and Trade System for Space Debris: Putting a Price on Space Hazards”, Journal of Space Law, Vol. 40/1-2, https://airandspacelaw.olemiss.edu/wp-content/uploads/2020/07/JSL-40.12.pdf.
[16] Rao, A., M. Burgess and D. Kaffine (2020), “Orbital-use fees could more than quadruple the value of the space industry”, Proceedings of the National Academy of Sciences, Vol. 117/23, pp. 12756-12762, https://doi.org/10.1073/pnas.1921260117.
[12] Salter, A. (2016), “Space Debris: A Law and Economic Analysis of the Orbital Commons”, Stanford Technology Law Review 19, p. 221, https://law.stanford.edu/wp-content/uploads/2017/11/19-2-2-salter-final_0.pdf.
[22] Scheraga, J. (1986), “Pollution in Space: An Economic Perspective”, Ambio, Vol. 15/6, pp. 358-60, www.jstor.org/stable/4313302.
[58] Scuderi, E. (2024), “Tax Incentives for the Space Economy and the Potential Impact of Pillar Two”, Air and Space Law, Vol. 49/1, pp. 69-94, https://doi.org/10.54648/aila2024006.
[35] Scuderi, E. (2022), “Provisions Primarily of a Fiscal Nature: Time to Dispel Doubts”, EC Tax Review, Vol. 31/5, pp. 273-285, https://doi.org/10.2139/ssrn.4119635.
[15] Skinner, M. (2017), “Orbital debris: What are the best near-term actions to take? A view from the field”, Journal of Space Safety Engineering, Vol. 4/2, pp. 105-111, https://doi.org/10.1016/j.jsse.2017.02.002.
[50] Spacewatch Global (2023), ClearSpace to launch the first active debris removal mission with Arianespace, 10 May, https://spacewatch.global/2023/05/clearspace-to-launch-the-first-active-debris-removal-mission-with-arianespace/.
[56] Stewart, M. (2022), “The Budget”, in Tax and Government in the 21st Century, Cambridge University Press, Cambridge, https://doi.org/10.1017/9781316160701.
[55] Surrey, S. and P. McDaniel (1985), Tax Expenditures, Harvard University Press.
[37] Tanzi, V. (2016), “Lakes, Oceans, and Taxes: Why the World Needs a World Tax Authority”, in Pogge, T. and K. Meht (eds.), Global Tax Fairness, Oxford University Press.
[10] Tapio, J. and A. Soucek (2019), “National Implementation of Non-Legally Binding Instruments: Managing Uncertainty in Space Law?”, Air and Space Law, Vol. 44/Issue 6, pp. 565-582, https://doi.org/10.54648/aila2019035.
[27] Taylor, J. (2011), “Tragedy of the Space Commons: A Market Mechanism Solution to the Space Debris Problem”, Columbia Journal of Transnational Law, p. 253, https://heinonline.org/HOL/LandingPage?handle=hein.journals/cjtl50&div=9&id=&page=.
[8] Undseth, M. (2021), “The Economics of Space Debris in Perspective”, Proceedings of the 8th European Conference on Space Debris (virtual), https://conference.sdo.esoc.esa.int/proceedings/sdc8/paper/12/SDC8-paper12.pdf.
[60] Weinzierl, M. (2018), “Space, the Final Economic Frontier”, Journal of Economic Perspectives, Vol. 32/2, pp. 173-192, https://doi.org/10.1257/jep.32.2.173.
[20] Weitzman, M. (1974), “Prices vs. Quantities”, The Review of Economic Studies, Vol. 41/4, p. 477, https://doi.org/10.2307/2296698.
[53] Yamamoto, T. and H. Okamoto (2017), “Cost analysis of active debris removal scenarios and system architectures”, 7th European Conference on Space Debris, https://conference.sdo.esoc.esa.int/proceedings/sdc7/paper/660.
Notes
← 1. UNOOSA, Space Debris Mitigations Guidelines of the Committee on the Peaceful Uses of Outer Space (2007); Inter-Agency Space Debris Coordination Committee, IADC Space Debris Mitigation Guidelines, (2007); Inter-Agency Space Debris Coordination Committee, IADC Space Debris Mitigation Guidelines (2020); European Code of Conduct for Space Debris Mitigation (2004).
← 2. The per-launch fee for suborbital launches did not vary by vehicle payload capability because the benefit accruing to the licensee was considered to be modest. Also, performance capability comparisons were difficult to quantify for such launches and the variance among different launch vehicles was not significant for the purposes of the activities to be conducted by the OCST. See Proposed Regulations: Commercial Space Transportation; User Fees No. 56 FR 8301 5 (Feb. 28, 1991).
← 3. Rephrasing the words of Hon Melissa Price, Address to the Australian Space Forum | Ministers for the Department of Industry, Science and Resources, https://www.minister.industry.gov.au/ministers/price/speeches/address-australian-space-forum (last visited Aug. 25, 2023); See also: Isabella Richards, Launch Application Fees Slashed, New Strategy for ‘Cohesive’ Space Industry, https://www.spaceconnectonline.com.au/launch/5328-launch-application-fees-slashed-new-strategy-for-cohesive-space-industry (last visited Aug. 25, 2023); Thomas Jones et al., The Space Law Review: Australia, https://thelawreviews.co.uk/title/the-space-law-review/australia (last visited Aug. 25, 2023).
← 4. This chapter assumes that tax policy options that hinder free access to outer space should be avoided. Under Article I of the Outer Space Treaty (OST) ‘[o]uter space, including the moon and other celestial bodies, shall be free for exploration and use by all States without discrimination of any kind, on a basis of equality and in accordance with international law’. The interpretation of this provision might constitute an obstacle to the implementation of tax measures that de facto make accessing outer space too costly, thus preventing an equal use of space resources.
← 5. Limiting the number of space launches is not an intended goal of the measure as, first, diminishing/pausing space launches would be economically and socially unsustainable as the space economy produces a value to the general public and, second, because even assuming a complete stop of new launches the number of debris would continue to grow. See European Space Agency, Active Debris Removal, available at: https://www.esa.int/Space_Safety/Space_Debris/Active_debris_removal (accessed 22 November 2022).
← 6. Similar to the design of the American ‘Invest in Space Now Act’ of 2003’.
← 7. From a legal perspective, the state where the object is registered retains jurisdiction over the space object and the persons aboard (quasi-territorial jurisdiction). Any removal operation carried out by another State requires the specific prior consent of the state of registration. Suppose there is an international body carrying out ADR services. In that case, it might be necessary to amend the liability convention and the OST to allow such international body to conduct debris removal operations.
← 8. Article III of the United Nations, Convention on International Liability for Damage Caused by Space Objects (1972), which reads: “In the event of damage being caused elsewhere than on the surface of the earth to a space object of one launching State or to persons or property on board such a space object by a space object of another launching State, the latter shall be liable only if the damage is due to its fault or the fault of the persons for whom it is responsible”. This type of “fault” liability differs from the “absolute” liability posed in the hands of states by Article II of the same Convention that reads: “A launching State shall be absolutely liable to pay compensation for damage caused by its space object on the surface of the earth or to aircraft in flight”.