Environmentally-related taxation and revenue potential for...
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European Environment Agency
Environmentally-related taxation and revenue potential for Portugal
European Environment Agency
EEA: European Environment Agency
• “The EEA aims to support sustainable development and to help achieve significant and measurable improvement in Europe’s environment…
• … through the provision of timely, targeted, relevant and reliable information to policy making agents and the public”
• EEA is an independent EU body with 32 member countries incl. Turkey, Switzerland and Norway
• Executive director: Prof. Jacqueline McGlade
• 200 staff in Copenhagen headquarters - and 6 Topic Centres with wide network throughout Europe
Collaborating countries
Member countries
European Environment Agency
Death, taxes and child-birth!
There is never any convenient time for
any of them … Margaret Mitchell in ’Gone with the wind’
European Environment Agency Eurobarometer
European Environment Agency
Environmentally-related taxes today
• defined by OECD as
• any compulsory, unrequited payment to general government
• levied on tax-bases deemed to be of particular environmental relevance
• categories used by Eurostat
• Energy / Transport / Pollution / Resources
European Environment Agency
Environmentally-related tax revenues as a share of total revenues from taxes and social contributions
Share of total taxes
0
2
4
6
8
10
12
Estonia
Latv
ia
Poland
Belgium
Austria
Germany
France
Slova
kia
Bulgaria
Sweden
Finland
Romania
Spain
Lithuania
EU-27
Hungary
Czech
Luxem
bourg
Norway
Britain
Icela
nd
Irela
ndIta
ly
Denmark
Netherla
nds
Cyprus
Greece
Slove
nia
PORTUGAL
Malta
%
1995
2010
European Environment Agency
Environmental tax revenues of GDP 2009
European Environment Agency
“Getting the prices right, means using fiscal policy to make
sure, that the harm we do is reflected in the prices we pay”
Christine Lagarde, IMF (June 2012)
European Environment Agency
Interrelations:
• The world is running short of resources
• Recession is linked with energy and climate crisis
European Environment Agency
Resource efficiency is essential for long-
term prosperity. And innovation is essential for resource-efficiency
World economy
Production Consumption
Global ecosystem
Natural
capital
provides
material
inputs…
…and
absorbs
waste
outputs
With a limited sustainable
throughput of resources, long-
term economic growth requires
enhanced resource efficiency
European Environment Agency
• increased resource prices have an impact on unit costs via prices on imported raw materials
• from an increased resource price no revenue can be recycled to lower distortionary taxes
• psychologically, the signalling effect of a tax is stronger than of a price fluctuation
Why taxes differ from prices
European Environment Agency
Benefits of broader tax base
•Taxes on labour are distortionary
•Environmentally-related taxes reflecting ‘external costs’ are not distortionary
•Revenue recycling: neutral tax shift can benefit the economy (and the environment)
European Environment Agency
Relative benefits with fiscal crisis - energy taxes have best performance
European Environment Agency
•Broadening tax base with environmentally-related taxes
•Remove environmentally harmful subsidies
•Move towards full-cost user charges for environmental services
Environmental fiscal reform
European Environment Agency
Water abstraction tax
• Urban leakage 30-40%
• Reduce leakage from sudden pipe ruptures • Tax abstraction, not
metering
• Maximum 10% loss allowed
• Water abstraction taxes • even small taxes make a
difference
Country
€ per m3
Domestic Industry Agriculture
Denmark
Belgium
Czech Rep
Germany
Hungary
Netherland
Poland
Portugal
0.67
0.06-0.08
0.09
0.10
0.002
0.20
0.01
0.02
-
0.06
-
0.04
0.002
-
-
0.003
-
0.06
-
0.04
-
-
0.02
0.0002
European Environment Agency
PT: Decline in diesel taxation (real effective rate)
0
100
200
300
400
500
600
700
800
900
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
€ p
er
10
00
lite
r
Estonia Greece Italy
Poland Portugal EU 2013 minimum rate
Spain
IT
PT
EE
9 cents
per liter
European Environment Agency
Diesel: offset the advantage
• Spain: low diesel tax a constraint, risk of tank-tourism
• Diesel car advantage over petrol in Portugal: €594 million per year
• Offset via the annual circulation tax
European Environment Agency
Company cars: registrations in EU
European Environment Agency
Tax expenditures on company cars
European Environment Agency
The potential for environmentally-related taxes in Portugal
Adjust tax rates for motor fuels and
vehicles for water and waste Introduce new taxes for air pollution,
packaging, pesticides Abolish environmentally
damaging subsidies Company cars; limit tax
expenditures Energy taxes; phase out
reduced rates
12 % of total taxes revenues of €3 billion
European Environment Agency
Transport Million €
2013 2014 2015 2016 Comment
Air travel tax 49 98 98 98 Apply UK rate of 14 € for longer flights; lower rate for
short flights at 3 € per passenger
HGV vignette scheme 170 170
Air pollution and noise for Heavy-Goods Vehicles; Directive 2011/76
Vehicles; diesel 594 594 594
Offsetting circulation tax per diesel vehicle; same tax burden as petrol vehicles
Sum 49 692 862 862
Energy taxes Million €
2013 2014 2015 2016 Comment
Petrol and diesel 69 137 137 137
Adjust tax rates to 2010-level in Portugal
Electricity 83 166 166 166 Align to Spain and Greece
Gas 30 60 60 60 Align to Spain
Carbon tax; non-ETS
83
171
171 108
Rising gradually to €15 per ton CO2 (Ireland)
Commission proposal of €20 per ton CO2
Hydro, old 116 116 166 Align to Spain
Sum 182 562 650 758
Tra
nsport
Energ
y
European Environment Agency
Million € /year
2013 2014 2015 2016 Comment
Water 101 101 101 Applying rates and system, whereby pipe leakage
could be reduced from 30-40% to 10%
Waste 56 112 112 112 Landfill and incineration €35 per ton (Ireland)
Packaging Shopping bag
107 30
107 30
107 30
Beverage packaging
Resources 35 35 35 Estonia system
SO2 NOx 95 95 Same rate as lorries (HGV)
Pesticides 100 100 Toxicity based
Sum 56 385 580 580
Pollution a
nd R
esourc
es
European Environment Agency
Design of environmentally-related taxes
Trade-off between multiple objectives must be taken into account:
• Environment – environmental effective
• Finance – stable revenues, i.e. fiscal sustainability
• Social concerns – distributional implications
• water and electricity: regressive tax
• transport: progressive tax
Experiences show that multiple objectives can be achieved at the same time!
European Environment Agency
Where environmental fiscal reform can make a difference
SO2 Waste Packa-ging
Carbon-energy
Vehicles
Health ● ●
Bio-diversity
●● ●● ●
Climate ●● ● ● ●● ●
Tax system
● ● ● ●● ●●
●● significant effect ● some effect
European Environment Agency
Thank you for your attention
http://www.eea.europa.eu