Transcript OECD POLICY FRAMEWORK FOR SUSTAINABLE DEVELOPMENT

Overview of carbon related taxation in
OECD countries
Presentation at the
AFDC 2010 Biennial Forum on
Fiscal and Financial Policies for Low-carbon Economic
Development
Shanghai, P.R. China
26 November 2010
Nils Axel Braathen
OECD, Environment Directorate
[email protected]
1
Introduction
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In October 2010, OECD published the book Taxation,
Innovation and the Environment …
…. to a large extent built on a number of ex post studies of
the innovation impacts of selected environmental policies …
… but also includes an updated overview of the use of
environmentally related taxes in OECD countries ...
… and a ‘user’s guide’ for policy makers on how to
implement such taxes.
This presentation will focus on the information regarding
carbon-related taxes in this book and related OECD work.
2
Revenues from environmentally related
taxes in per cent of GDP, by tax-base (2008)
5%
Other
Motor vehicles
Energy
4%
Per cent of GDP
3%
2%
1%
0%
-1%
3
-2%
Revenues from environmentally related
taxes in per cent of GDP, by tax-base
0.50
2.5%
0.45
0.40
2.0%
0.30
1.5%
0.25
0.20
1.0%
0.15
Other
0.5%
0.10
Motor vehicles and transport
Energy products
0.05
Rotterdam spot price, unleaded petrol
4
0.0%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
0.00
€ per litre
Per cent of GDP
0.35
Why have revenues decreased in per
cent of GDP in recent years?
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This is closely linked to the increase in world crude oil prices
since year 2000.
This price increase has contributed to people substituting
away from motor fuel use, towards other goods and services.
In short: Price signals work!
As motor fuels often are (much) more taxed than other goods
and services, revenues from environmentally related taxes
decrease in per cent of GDP.
The high motor fuel prices may also have made it politically
difficult for countries to increase nominal tax rates in line with
inflation.
Hence, for example, the real tax rate on petrol decreased 8%
between 2000 and 2010.
5
€ per litre
0.6
0.6
0.4
0.4
0.2
0.2
0.0
0.0
-0.2
P - 1.1.2010
D - 1.1.2010
P - 1.1.2000
D - 1.1.2000
Estonia*
Slovenia
Spain
Hungary
Austria
Luxembourg
Czech Republic
Switzerland
Slovak Republic
Israel
Sweden
Ireland
Italy
Belgium
Denmark
Portugal
France
Greece
Norway
Finland
United Kingdom
Germany
Netherlands
Turkey
0.8
Mexico
United States -- Fed
Canada -- Fed
United States -- Fed + State
Canada -- Fed + Prov
New Zealand
Chile
Australia
Iceland
Poland
Japan
Korea
Tax rates on petrol and diesel
1.0
1.0
0.8
-0.2
6
Tax rates on petrol and diesel (I)
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By far the highest rate of tax on petrol in the OECD, and the
second highest rate on diesel, are levied in Turkey, one of the
OECD countries with the lowest income per capita.
If the motor fuel taxes had been levied only to address
greenhouse gas emissions, a tax rate of 0.6€ per litre petrol
would correspond to a “carbon tax” of 256€ per tonne CO2
emitted.
However, in practice, the taxes on petrol and diesel are of
course levied for a number of other reasons, and one should
not count all of them as “carbon taxes”.
Nevertheless, it is the full rate of tax that will influence the
extent to which CO2 will be emitted.
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Petrol taxes vs. diesel taxes (II)
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Because diesel-motors are more fuel efficient than petrol-driven
motors, diesel-driven vehicles emit less CO2 per km driven than what
petrol-driven vehicles does.
However, this is not a valid argument for setting tax rates on diesel
lower than tax rates on petrol – because the drivers benefit directly
from this fuel efficiency advantage (the benefits are fully internalised).
One litre diesel causes more CO2 emissions than one litre petrol.
And diesel-driven vehicles cause more harmful emissions of NOx,
particle matter (PM10, PM2.5) and noise than petrol-driven ones.
Petrol-driven vehicles cause larger VOC emissions.
None of these impacts are internalised – the drivers do not take these
impacts into account in their decisions.
All in all, from an environmental perspective, tax rates per litre diesel
ought to be higher than tax rates per litre petrol – not lower.
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Impacts of prices and taxes on transport
sector energy use per unit GDP I
45
0.50
0.45
40
0.40
35
0.35
30
0.30
25
0.25
20
0.20
15
0.15
Other transport sector fuel use per GDP unit
Diesel use per GDP unit
Petrol use per GDP unit
Petrol tax rate, €
Diesel tax rate, €
Rotterdam spot price, 98 octane unleaded petrol
10
5
0
94
95
96
97
98
99
00
01
02
03
04
05
06
07
0.10
0.05
08
90.00
€ per litre
Tonnes oil equivalent per million USD GDP unit
OECD total
Impacts of prices and taxes on transport
sector energy use per unit GDP II
90
Turkey
70
0.8
60
50
0.4
30
20
0.2
10
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
0.0
0.8
60
50
0.6
40
0.4
30
20
0.2
10
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
0.0
Germany
80
1.0
70
0.8
60
50
0.6
0.4
30
20
0.2
10
0
0.0
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
United States
80
1.0
70
0.8
60
50
0.6
40
0.4
30
20
0.2
10
10
0
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
0.0
€ per litre
40
Tonnes oil equivalent per million USD GDP unit
90
€ per litre
Tonnes oil equivalent per million USD GDP unit
70
0
90
1.0
80
€ per litre
0.6
40
0
Mexico
1.0
Tonnes oil equivalent per million USD GDP unit
80
€ per litre
Tonnes oil equivalent per million USD GDP unit
90
“Carbon taxes” and total taxes levied on
selected energy products in OECD countries
01.01.2010
Only “Carbon tax”, per
tonne CO2
Heating oil, domestic use,
per litre
Coal, per tonne
Natural gas, per Nm³
Natural gas, per MWh
Petrol, per litre
Diesel, per litre
Denmark
Finland
~20€
~3050€
0.33
270.8
0.35
31.9
0.57
0.43
0.087
50.5
0.02
2.1
0.63
0.36
Iceland
~13€
0.02
0.0
0.0
0.0
0.36
0.32
Ireland
Norway
~ 15€
~1040€
0.04
4.18
0.03
2.8
0.54
0.45
0.17
0.0
0.01
4.9
0.62
0.47
Sweden
U.K.
~100€
~530€
0.41
278.2
0.24
21.4
0.52
0.41
11
0
14.4
0.02
1.80
0.63
0.63
Tax rates per tonne CO2 emitted implicit in
the excise tax rates on selected fossil fuels
01.01.2010
300
Heating oil, domestic use
Coal
Natural gas
Petrol
Diesel
250
€ per tonne CO2
200
150
100
50
12
0
Denmark
Finland
Iceland
Ireland
Norway
Sweden
U.K.
CO2-related tax rate differentiation in
motor vehicle taxes
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A number of countries have introduced CO2-related tax rate
differentiation in taxes on motor vehicles:
– Based directly on estimated CO2 emissions or on fuel efficiency.
– In one-off and/or in recurrent taxes.
• One-off: taxes per vehicle at purchase
• Recurrent: taxes e.g. per year, to be allowed to use a vehicle
– Some countries apply different rates for petrol- and diesel-driven cars.
– In some countries, the differentiation depend on the vehicle price.
– France has special rates for company-owned cars.
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The following slides will show how tax rates per tonne CO2
emitted over the lifetime of a vehicle can be calculated.
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One-off tax per vehicle as a function of
CO2 emissions per km driven
Petrol-driven vehicles, 01.01.2010
70,000
Petrol-driven vehicles
60,000
France
Portugal
Spain -- 10,000€
Finland -- 10,000€
Austria -- 10,000€
Ireland -- 10,000€
Netherlands
Belgium -- Wallonia
50,000
€ per vehicle
40,000
30,000
Norway
Canada
Spain -- 25,000€
Finland -- 25,000€
Austria -- 25,000€
Ireland -- 25,000€
Denmark
USA
20,000
10,000
0
1
-10,000
-20,000
71
101
131
161
191
221
251
281
gram CO2 emitted per km driven
311
341
371
14
400
Tax per year as a function of the vehicles’
CO2 emissions per km driven
Petrol-driven vehicles, 01.01.2010
5,000
Petrol-driven vehicles
4,500
4,000
Denmark
Germany
3,500
€ per year
Ireland
3,000
Luxembourg
Portugal
2,500
Sweden
UK
2,000
France (big polluters)
1,500
France (company cars)
1,000
500
0
1
71
101
131
161
191
221
251
gram CO2 emitted per km
281
311
341
15
371
400
Calculating tax per tonne CO2 emitted
over a vehicle’s lifetime
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Assume that a vehicle is driven 200,000 km over its lifetime.
For the recurrent taxes, assume that the lifetime is 15 years.
Calculating lifetime emissions:
– Gram CO2 per km * 0.2 = tonne CO2 emitted over the lifetime
– 180 g CO2 per km * 0.2 = 36 tonnes CO2 emitted over the lifetime
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One-off taxes for a vehicle emitting 180 g CO2 per km:
– If the tax is 7200€ per vehicle => (7200 / 36) = 200 € per tonne CO2
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Recurrent taxes for a vehicle emitting 180 g CO2 per km:
– If the tax is 540€ per year => (540 / 36) * 15 = 225 € per tonne CO2
– (The amount would be lower, if discounting of future tax payments was
taken into account.)
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CO2-related tax rate differentiation in oneoff motor vehicle taxes
€ per tonne CO2 emitted over the vehicle lifetime, petrol-driven vehicles
1,000
€ per tonne CO2 emitted during the vehicle's lifetime
Petrol-driven vehicles
800
The calculations assume
that each vehicle is driven
200 000 km over its lifetime
600
400
200
0
-200
-400
-600
51
81
111
141
171
201
231
261
291
321
351
381
gram CO2 emitted per km
France
Portugal
Spain -- 10,000€
Finland -- 10,000€
Austria -- 10,000€
Ireland -- 10,000€
Netherlands
Belgium -- Wallonia
Norway
Canada
Spain -- 25,000€
Finland -- 25,000€
Austria -- 25,000€
Ireland --17
25,000€
Denmark
USA
CO2-related tax rate differentiation in
recurrent motor vehicle taxes
€ per tonne CO2 emitted over the vehicle lifetime, petrol-driven vehicles
€ per tonne CO2 emitted over the vehicle's lifetime
1,000
Petrol-driven vehicles
900
France (big polluters)
France (company cars)
Denmark
Germany
Ireland
Luxembourg
Portugal
UK
Sweden
800
700
600
500
400
The calculations assume that
each vehicle is driven 200 000 km
over a lifetime of 15 years.
300
200
100
0
51
81
111
141
171
201
231
261
291
gram CO2 emitted per km
321
351
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381
Tax per tonne CO2 emitted over a vehicle’s
lifetime, selected emission levels per km
Petrol-driven vehicles, 01.01.2010
700
500
300
100
-100
-300
1,100
€ per tonne CO2 emitted over the vehicle lifetime
€ per tonne CO2 emitted over the vehicle lifetime
900
1,100
100 gram CO2 per km
900
900
700
500
300
100
-100
One-off
150 gram CO2 per km
700
500
300
100
-100
1,100
230 gram CO2 per km
€ per tonne CO2 emitted over the vehicle lifetime
€ per tonne CO2 emitted over the vehicle lifetime
1,100
900
330 gram CO2 per km
700
500
300
100
-100
Recurrent
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The case for CO2-related differentiation of
motor vehicle taxes I
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In a “perfect world”, one can question the need for CO2related differentiation of motor vehicle taxes.
As there is a direct link between the carbon content in the
motor fuels used and the CO2 emissions of a given vehicle, it
could be more efficient to just apply a tax reflecting the
carbon content of different fuels.
Differentiation of a tax on vehicle purchases only affect
(directly) the decisions of those that buy a new vehicle – and
it has no (or little) impact on how much the vehicles are used.
Differentiation of recurrent vehicle taxes can affect the
decision to continue to own both new and old vehicles – but
will also have no (or little) impact on how much the vehicles
are used.
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The case for CO2-related differentiation of
motor vehicle taxes II
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However, the world is not quite perfect.
It is e.g. possible that consumers are “myopic” – i.e. that
they don’t take future fuel consumption much into account
when buying a new car.
It can also be “politically easier” to introduce a (possibly
revenue-neutral) CO2-differentiation in vehicle taxes than to
introduce (only) “sufficiently high” motor fuels taxes.
However, the degree of differentiation of vehicle taxes
applied in some countries can seem out of proportion to the
CO2 abatement incentives provided elsewhere in the
economies.
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More information
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www.oecd.org/env/policies/database
www.oecd.org/env/taxes
www.oecd.org/env/taxes/innovation
www.oecd.org/env/transport
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[email protected]
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