Transcript Implications of EU Environmental Policy for the new EU

Stefan Speck
Kommunalkredit Public Consulting GmbH
Implications of EU Environmental
Policy for the new EU Member States
7th European Forum for Science and Technology
“Efficiency of the European Science
and its Global Competitiveness”
Panel ‘Economy and Environment’
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Prague, 22 May 2008
Environmental taxation at the EU
Relevant EU legislation in the field of environmental taxation:
Council Directive 2993/96/EC restructuring the Community framework
for taxation of energy products and electricity
Setting minimum tax rates for almost all energy products
depending on usage

Revenues generated by energy taxes may be used for tax
shifting programmes, i.e. principle of tax neutrality; environmental
tax reform (ETR)

Concept of ETR promoted by international organisations: OECD,
European Commission: see ‘Green Paper on MBI for environment and
related policy purposes’, European Environment Agency
Implemented in several EU member states
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The concept of ETR
Environmental tax reform (ETR) - a reform of the national tax system
by shifting the burden of taxes from conventional taxes, such as labour,
to environmentally damaging activities, such as resource use or
pollution. Revenue neutrality is an important characteristic of ETRs in
Europe meaning that overall tax burden remains the same (government
budgetary position is unchanged).
ETR implemented throughout Europe but differences in design
regarding
• environmental / energy taxes being utilised
• sectors affected (household, industry, transport, etc.)
• revenue recycling measures applied
• part of a larger fiscal reform process
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Structure of tax (incl. social security
contributions) revenues as % of GDP in
selected EU Member States in 2005
(source: Eurostat 2007)
Indirect taxes
Czech
Denmark
Republic
11.9
17.9
Estonia Germany
UK
EU
13.5
12.1
13.3
13.8
- VAT
7.2
10
8.8
6.2
6.8
6.9
Direct taxes
9.3
31.4
7.1
10.3
16.8
13.2
- personal income
4.6
24.6
5.6
8.6
10.5
9.2
Social contributions
15.1
1.1
10.4
16.3
6.9
12.8
-paid by employers
10.4
0
10
7
3.9
7.3
- paid by employees
Total tax revenues and
SSC
Environment taxes
3.6
1.1
0.3
6.4
2.9
4
36.3
50.4
31
38.7
37
39.7
2.8
5.8
2.2
2.5
2.5
2.6
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ETRs implemented in EU member states
Germany – implemented during the period 1999 - 2003
• Environmental objective: Environmental protection / reduction of GHG emissions
• Economic objective: to reduce employers’ and employees’ pension contributions
 reduce labour cost and to increase employment (recycling mechanism)
• Energy taxes – increase in transport fuel taxes, natural gas and fuel oil plus
introduction of an electricity tax
UK - three ETRs have been implemented since 1996
•1996 – landfill tax, 2001 – climate change levy (business energy use); and 2002 –
aggregates tax.
•Recycling mechanism of all three ETRs: reduction in employers’ NIC and a
proportion for environmental investments, such as Carbon Trust
ETR revenues: UK: 2.7 billion Euro (0.15% of GDP) and GER: 18 billion Euro
(0.8% of GDP)
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ETRs implemented in EU member states
Estonia
2006 - increase in pollution charges and natural resource taxes
2008 - increase in transport fuel taxes (petrol and diesel) and introduction of
tax on electricity  fulfilling the minimum excise duty rates
Recycling mechanism: revenues are planned to offset the reduction of personal
income tax rate (flat tax) from 23% (2006) to 20% (2009)
Czech Republic
major revision of fiscal / tax system: introduction of income flat tax and revision
of corporate income tax plus ETR to be implemented in three stages
1. stage (2008): introduction of new energy taxes (coal, natural gas and
electricity – based on 2003 Energy Taxation Directive)
2. stage (2009/2010): consideration of introducing CO2 tax replacing the
current system of pollution charges
3. stage (after 2010): to be determined in due course
ETR should be revenue-neutral: reduction of social contributions - to be decided
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