Environmental Taxation in the EU
Challenges for economic growth, fiscal
sustainability and environmental protection
6 June 2014, Nicosia
Dr. Manfred Rosenstock
DG ENV, European Commission
The views expressed in this presentation are those of the author and may not in any circumstances
be regarded as stating an official position of the European Commission
DG ENV
Political Context at EU level





Energy and resource prices likely to increase over time on
world market
Thus need to adapt our economic structures („green growth“,
„eco-efficient economy“). Key point in Europe 2020 strategy,
Flagship Initiative: Resource-efficient Europe and Roadmap
to a resource-efficient Europe
Encourage through choice of efficient instruments =>
market-based instruments to promote energy efficiency, curb
pollution, encourage innovation
Roadmap calls for shift towards environmental taxes and
removal of environmentally-harmful subsidies.
Follow-up through European Semester: Annual Growth
Survey; Country-specific recommendations
DG ENV
Potential for a tax shift
 Economic and environmental arguments in favour of
environmental taxes.
 Environmental tax reform (ETR) defined as shift from
taxing labour (and capital) to pollution and resource use. ETR
plus reform of environmentally-harmful subsidies =>
Environmental fiscal reform.
 Context of economic crisis: Need for fiscal consolidation,
environmental taxes as instrument.
 Number of MS did ETR since 1990s. Still no increase of
environmental taxes in relative terms, rather decline in the
EU for many years, stabilisation since 2009.
DG ENV
Share of environmental taxes in total taxes
EU-15/EU-28
1995
2003 2012
Cyprus CY
2003
2012
Energy taxes
5,4
5,2
4,5
6,0
5,4
Transport taxes
1,4
1,3
1,3
5,7
2,2
Pollution taxes
0,2
0,2
0,3
n.a.
n.a.
Environmental taxes
7,0
6,7
6,1
11,8
7,6
Source: Eurostat, 2014
DG ENV
Revenue from environmentally-related taxes,
in % of total taxes, 2002 vs. 2012
Energy taxes
Transport taxes
Taxes on pollution/resources
12
Environmental taxes' contribution (percentage)
10
8
6
4
2
0
4
DG ENV
Acceptability issues
 Reasons for limited progress?
 Possible explanation: Policy successful
 Also Other MBI – cap and trade, habitat banking, subsidies
 Perception of high tax burden in EU
 Concerns about competitiveness and distributive effects
 Thus further increases challenging. Approaches used by MS:
o Revenue recycling: lump-sum transfers, ETR
o Derogations: tax reductions/exemptions
o Earmarking for „green“ purposes
o Harmonisation at EU level
DG ENV
Directive on energy products taxation –
general approach
• Not a Community tax but framework of rules to restructure
and harmonise national tax systems (Directive 2003/96/EC).
• Includes mineral oil products plus other energy products
(coal, lignite, natural gas), electricity; with minimum rates.
• Not a CO2 tax but some incentives to reduce CO2 emissions
through higher prices of energy products
• Commission proposal for review of ETD (2011):
 Contribute better to climate and energy targets by splitting
tax in two components: a CO2 tax on emissions outside
ETS, an energy consumption tax
 Abolishing existing distortions between various energy
products
DG ENV
Environmental taxation – transport, pollution,
resources
• Transport: Important and growing source of CO2 emissions and
air pollution, noise and congestion. Most MS use annual
circulation and/or registration taxes. In recent years, more MS
introduced CO2 element in taxes.
• Large variations in use of green taxes on pollution and
resources between MS.
 Water Framework Directive: MS to ensure cost recovery in
line with polluter-pays principle; Blueprint
 Waste management: Waste policy/targets review 2014.
Some MS tax landfill or specific waste, e.g. plastic bags
European Semester recommendations/ analysis
 Resource taxes, e.g. aggregates taxes, in some MS
DG ENV
Types of environmental taxes used by MS
(Source: EEA, 2006)
Austria Belgium Denmark Finland France Germany Greece Iceland Ireland Italy
Lux'burg Holland Norw ay Portugal Spain
Air/Energy
CO2*
SO2
NOx
Fuels
S in f uels
Transport
Car sales and use
Dif f . annual car tax
Water
Water ef f luents
Waste
Waste-end
Dangerous w aste
Noise
Aviation noise
Products
Tyres
Beverage cont.
Packaging
Bags
Pesticides
CFCs
Batteries
Light bulbs
PVC/phtalates
Lubrication oil
Fertilisers
Paper, board
Solvents
Resources
Raw materials
in 1996
new in 2000
new in 2004
Sources, including:
EEA (2000) Environmental taxes - Redent developments in tools for integration, Copenhagen
OECD/EU database for environmental taxes (http://www1.oecd.org/env/policies/taxes/index.htm)
DG ENV
Sw eden UK
Types of environmental taxes used by MS
(Source: EEA, 2006)
CY
CZ
EST
H
LV
LT
M
PL
SLO
SK
BG
RO
TR
HR
MK
Air/Energy
CO2*
SO2
NOx
Other air pollutants
Fuels
S in fuels
Transport
Car sales
Annual circuation tax
Water
Water effluents
Waste
Waste taxes
Noise
Aviation noise
Products
Tyres
Beverage cont.
Packaging
Bags
Pesticides
CFCs
Batteries
Light bulbs
PVC/phtalates
Lubrication oil
Fertilisers
Paper, board
Solvents
Resources
Raw materials
Source: OECD/EEA database for environmental taxes (http://www1.oecd.org/env/policies/taxes/index.htm)
DG ENV
CS
BiH
AL
Further information
• COM Studies on Environmental Taxation issues
 http://ec.europa.eu/environment/enveco/taxation/index.htm
• Studies on potential for Environmental Fiscal Reform
 http://ec.europa.eu/environment/integration/green_semeste
r/pdf/EFR-Final%20Report.pdf
 http://www.eea.europa.eu/highlights/fiscal-reform-cancreate-jobs
OECD/EEA database on environmental policy instruments
 http://www2.oecd.org/ecoinst/queries/Default.aspx
EEA reports on economic instruments in environmental policy
 http://www.eea.europa.eu/themes/policy/publications
DG ENV