Biscay Fiscal (Tax) Policy and the SDGs

This research project is led by the UCL Institute for Innovation and Public Purpose (UCL IIPP).
Explore all IIPP research projects here. 

Dates of the project: 2020-2021

The Challenge 

While fiscal policy plays a critical role in shaping economies, its potential to drive sustainable development remains underexplored – particularly in high-income countries. Most existing research focuses on improving tax systems in low-income contexts or on individual SDGs, leaving a gap in holistic approaches. The challenge lies in reimagining taxation not just as a tool for revenue generation, but as a mechanism to build markets, steer investment and direct economic activity towards inclusive and green outcomes. 

Our Approach 

At UCL IIPP, we partnered with the Biscay Government in Bilbao, Spain, to explore how fiscal policy can be aligned with the UN Sustainable Development Goals (SDGs). Together, we asked two deceptively simple questions: How can fiscal policy advance the SDGs? And what would it mean to design a tax system around them? 

This collaboration led to the development of a world-first SDG-oriented tax model. Key outputs include: 

• A Policy Report outlining the design of a composite index that links corporate taxation to firms’ contributions to the SDGs. The report sets out the ambition, principles and structure of the index, offering a vision for how tax authorities can incentivise sustainable business practices.
• A technical report detailing 28 contribution areas (CAs) that form the basis of the index, including scoring methods and conceptual definitions, used to guide expert and stakeholder consultation. 

Beyond taxation, the project applies a public value lens to economic growth in the Basque region, drawing on IIPP’s research into market-shaping policy, institutional transformation and rethinking value in the 21st century. 

Why This Matters 

Aligning fiscal policy with the SDGs offers a powerful opportunity to reshape economies for sustainability and equity. This project demonstrates how taxation can go beyond revenue collection to actively support inclusive, green growth.  

The Biscay model provides a pioneering example of how governments can take a proactive role in directing innovation and investment towards shared societal goals. Through this work, IIPP continues to advance its mission of rethinking economic policy for public purpose. 

Resources

Video: The Biscay Model - Episode 1: ‘What if taxation could create a fairer future?’
Description: The Biscay Fiscal (Tax) Policy and the SDGs project is a research collaboration designing fiscal policy around the SDGs between UCL IIPP and the Biscay Government, based in Bilbao, Spain. In episode 1 of ‘The Biscay Model’ animation series we introduce this collaboration and start exploring how taxation can be used to achieve the UN SDGs.

Video: The Biscay Model - Episode 2: What if governments looked at tax differently?
Description: The Biscay Fiscal (Tax) Policy and the SDGs project is a research collaboration designing fiscal policy around the SDGs between UCL IIPP and the Biscay Government based in Bilbao, Spain. In episode 2 of ‘The Biscay Model’ animation series we look at the role of governments in achieving the UN SDGs and the new approaches they should consider.

Video: The Biscay Model - Episode 3: ‘How the Biscay Model works: Tax for a sustainable future’
Description: The Biscay Fiscal (Tax) Policy and the SDGs project is a research collaboration designing fiscal policy around the SDGs between UCL IIPP and the Biscay Government based in Bilbao, Spain. In episode 3 of ‘The Biscay Model’ animation series we learn more about how the Biscay Model has been envisaged to work in practice.

Video: The Biscay Model - Episode 4: ‘Looking forward: Greener, fairer, more inclusive’
Description: The Biscay Fiscal (Tax) Policy and the SDGs project is a research collaboration designing fiscal policy around the SDGs between UCL IIPP and the Biscay Government based in Bilbao, Spain. In episode 4 of ‘The Biscay Model’ animation series we look beyond taxation at other examples of how policymakers can think proactively about the wide range of tools they have at their disposal to facilitate the shift to a greener, fairer and more inclusive economy.

Funder

This project is funded by The Provincial Council of Biscay (Bizkaia). 

This research project is led by the UCL Institute for Innovation and Public Purpose (UCL IIPP).
Explore all IIPP research projects here.