Transcript The case for green own resources

The case for using green taxes
as ‘own resources’
to finance the EU budget
17th GCET – Groningen – Environmental fiscal reform II
Dr Constanze Adolf & Klaus Röhrig
22 September 2016
1
Green Budget Europe
 Founded 2008
 Brussels-based EU-wide experts platform
 Promoting Market-Based Instruments
Our vision:
An ecological and social market economy, in which
"prices tell not only the economic, but also the
ecological truth" (Ernst Ulrich von Weizsäcker)
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Outline
 A momentum for Green Own
Resources
 The current system and its deficits
 Ecological own resource candidates
 Example: EU carbon tax
 Key messages and conclusion
3
Study background
 Commissioned by the Greens/EFA
 Basis for intra party debate on EU
budget reform
 Available on our website.
4
The current system and its deficits
5
Communicating the EU budget and its deficits
1. Opacity
2. Demise of genuine
own resources
3. Insufficient
democratic
accountability
4. Late payments
5. No market steering
effects of EU revenues
Source: Green Budget Europe (2016). Green Taxes as a Means of Financing the EU Budget: Policy
Options. Study published in July 2016.
Definition: “Green Own Resources”
 Genuine own resources providing
European public goods
 Transformative potential of EU
budget
 Fair competition within the Single
Market
 Polluter-pays-principle
 Less tax competition
 Better allocation of resources
7
Promising Candidates
1.
2.
3.
4.
Road fuel tax
Carbon tax
Energy tax
Revenue from European Court rulings
8
Example: Road fuel tax
 Tackles emissions of the transport sector, as well as
congestion, air pollution and related public health
impacts
 Addresses the diesel-petrol price gap
 Reduces fuel tourism and eliminates distortions in
Single Market
 ‘Dieselgate’
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Example: Carbon Tax
An EU-wide carbon tax can
produce a reliable price for
carbon
 Carbon price is crucial step in
decarbonisation
 No coherent carbon price in
non-ETS sectors
 Internalise the detrimental effects of carbon emissions
 Provide incentives for consumers, producers and investors to
shift capital towards low-emission sectors
 Support the European Union’s commitment to its 2050
greenhouse gas reduction targets as well as implementing the
Paris Agreement
10
Assessment criteria for green own resources
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Outcome
12
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Conclusion
 Different strengths and weaknesses of the four
options
 Results feed into discussions on an alternative
EU funding system
 Provides starting point for further in-depth
research
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We have all the evidence …..
… why not acting?
Source: projectmanagementdocs.com/
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Candidate taxes assessed in the study




EU carbon tax
Energy tax
Road Fuel tax
Air ticket tax




Border Carbon Adjustments
EU Corporate Income Tax
Financial Transaction Tax
CJEU Fines
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Better communication necessary
 Determine crucial target groups and their
needs
 Develop tailored messages by framing
arguments in response to main concerns
 Economy Frame
(competitiveness and revenue stability)
 Equity Frame (social equity and regressivity)
 Ecology Frame (environmental
effectiveness)
 Europe Frame (subsidiarity)
Exploring the myths
1. Bad for Competitiveness?
Ensure competitiveness in low-carbon market (carbon tax DK)
2. Disrupt Social Equity?
Environmental taxes are less regressive than other forms of taxation
3. Environmentally Ineffective?
Multiple success stories prove the opposite (1)
4. Revenue Stability
Depends on the tax design and tax rate flexibility over time
5. Infringement of the Subsidiarity principle?
Green own resources provide European added value unattainable by member
states alone
(1) Overview of environmental tax reforms and their ecological outcomes in the final report of the Green Fiscal
Commission, 2009.
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Example: EU carbon tax
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Example: Carbon Tax
Economy
•
Green Community
•
•
Example: Carbon Tax
•
Citizens
•
•
Local Councillors
•
Industry & Trade
Unions
•
•
Member States
•
•
Ecology
Decoupling economic
growth from GHG
emissions
Prevent “Low-carbon
leakage”
Boost investments in lowcarbon technology
•
No further financial
burden, no overall tax
increases
No negative impact on jobs
and growth
•
•
Secure competitiveness of
regions (especially those
with energy-intensive
industry)
•
Secure international
competitiveness of energyintensive industry (tax
exemptions)
Enable investments
•
No harm to national
industry
No big shift in contribution
ratio
Revenue stability
•
•
•
•
Equity
Effective instruments to
achieve climate
commitments
Applying the polluter-paysprinciple
Immediate action
•
•
Guarantee social justice
No disproportionate
burden on low-income
households
•
•
EU-wide carbon tax
In favour of a stronger and
more united Europe, in
particular on climate
matters
Polluter-pays-principle
Health issues connected to
environmental pollution
•
No disproportionate
burden on low-income
households
Burden should be
compensated
•
More Europe only, if
Member states cannot
provide the public good
effectively
Decisions on budget need
to become more
transparent and democratic
Interregional equity: no
disproportionate negative
impact on poorer regions
(regions with high emission
levels and low economic
growth)
•
•
•
Europe
•
Beneficial impact on local
environment (regions with
high air pollution levels)
•
Clear long-term strategy for
emission reduction
Allow for gradual transition
process
•
No disproportionate
burden on workers and
low-income households
(Trade Unions)
•
More Europe only, if
Member states cannot
provide better market
conditions
Assistance in Effort sharing
Allow for gradual transition
process
•
Interstate equity: no
disproportionate negative
impact on poorer countries
with high emission levels
•
No transfer of fiscal
competences
Retain discretion on tax
rate and exemptions
•
•
Participation in policyprocess
Decisions on budget need
to become more
transparent and democratic
Economy
•
Green Community
Enhance the development of
low-carbon industry and the
decoupling of economic
growth from GHG emissions
in the medium- and long-term
Ecology
•
•
•
Example: Carbon Tax
•
Citizens
•
Carbon content directly taxed
(polluter-pays-principle)
Incentivise a shift in
consumer and producer
behaviour towards lowcarbon activities
•
•
Less regressive than other
forms of taxation (income tax,
VAT)
Compensatory measures can
offset regressive effects
•
Less regressive than other
forms of taxation (income tax,
VAT)
Compensatory measures can
offset regressive effects
•
•
•
Strong case for European
collective action
Most effective if EU-wide and
aligned tax rates
Provide transnational public
good (GHG reduction)
•
•
Secure competitiveness
among Member States
•
Incentivise a shift in
consumer and producer
behaviour towards lowcarbon activities
•
Use of transition periods and
tax reductions for specific
industries/regions
•
Need to ensure participation in
national decision-making on tax
rates, tax exemptions and
compensatory measures
(subsidiarity)
•
Stimulate the investment in
clean energy and low-carbon
technology
Provide investor certainty
and allow for a clearly
specified transition period
•
Incentivise a shift in
consumer and producer
behaviour towards lowcarbon activities
•
Possibility of country-specific
tax reductions for energyintensive industry
•
Most effective if EU-wide and
aligned tax rates
Provide transnational public
good (GHG reduction)
Secure competitiveness
among Member States
Redistribution of national
contributions might entail
compensations to ‘net losers’
•
Make sure the EU is on track
for its commitments under
the ESD/ESR, the Paris
Agreement and the
Sustainable Development
Goals
•
Use of transition periods and
tax reductions for specific
industries/regions
•
•
•
•
•
Member States
Internalise the costs of up to
55% of the EU’s total GHG
emissions
Carbon content directly taxed
(polluter-pays-principle)
Implement Paris Agreement
and SDGs
Europe
Contribute to economic
growth, if implemented as a
tax shift
Secure competitiveness
among Member States
•
Local Councillors
Industry & Trade
Unions
Equity
•
•
•
•
Most effective if EU-wide and
aligned tax rates
Provide transnational public
good (GHG reduction)
Power to levy taxes remains
at MS level
Need to ensure participation in
national decision-making on tax
rates, tax exemptions and
compensatory measures
(subsidiarity) 22
Conclusions
 Currently difficult to gain political capital with subjects
like “taxation”, “budget reform” and “European Union”
 There is enough evidence to defend GORs against
widespread concerns
 But follow-up needed: Develop comprehensive
communication strategies to reach outside the expert
circles
 And spread the word!
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Thank you for your attention!
Dr Constanze Adolf
[email protected]
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