Excise on electricity as an EU own resource in the light of sustainable development Maciej Cieślukowski Poznań University of Economics and Business Department of Public Finance

Why the excise on electricity? Common market of electric energy (Emission Trading System, Directive 2003, Directive 2011) Excise on electricity in Poland since March 2002 (0,02 PLN/KWh) No previous investigations on the excise on electricity as EU own resource

Objective, hyphothesis, methodics To investigate if the excise on electricity meets criteria of fair taxation between citizens Hyphothesis The excise on electricity does not ensure fair taxation between consumers Methodics If and how the excise is shifted (multi-variable regression), Who suffers higher tax burden: the poorer or richer? (tax burden decomposition – Pearson concentration coefficient) Subject of analysis Polish households in the years 1993 – 2014; 2006 and 2014

Market of electricity in Poland Date Institutional changes 01.07.1993 Introduction of VAT (7% on the electric energy) and the excise tax (electric energy is free of the duty) 01.01.1997 Energy Regulatory Office (ERO) is established. President of ERO i.a. regulates and promotes the market, counters the monopoly practices, approves the tariffs of energy companies 01.01.1999 Replacement of the official prices of electric energy set by Ministry of Finance by the separate tariffs for electric energy and its distribution, calculated (according to official rules) by the energy companies (producers and distributors). President of ERO controls and approves the tariffs every year 07.12.1999 Polish Power Exchange (PPE) is opened 01.07.2001 President of ERO liberates prices for energy producers - he stops approving the tariffs 26.03.2002 Introduction of the excise duty on electric energy (0,02 PLN/KWh). The tax is paid by energy producers 01.05.2004 Poland enters the European Union and is obliged to meet the rules of the electric energy market Directive (2003/54/WE). VAT rate on electric energy increases up to a standard rate 22% 01.07.2007 Division of distribution into distribution and trade. Liberalization of the energy trade market. The final consumers (including households) are free in a choice of the electric energy direct supplier (a trade company) on a domestic market 01.03.2009 The subject to excise taxation is shifted from energy producers to traders. The traders can formally shift the excise duty on the final consumers and the tax is showed on the invoice 01.01.2010 The VAT standard rate increases up to 23%

Structure of the market in Poland Formal excise payer since March 2002 25 main producers of electricity, 1 transmission operator, 5 main distributors, 5 main trade companies 59 other small trade companies Formal excise payers since March 2009

Regression model Alm J., Sennoga E., Skidmore M., 2009, Perfect Competition, Urbanization, and Tax Incidence in the Retail Gasoline Market, “Economic Inquiry” 47, no 1, p. 118 – 134.

Main results

Calculation of the average monthly excise duty amount paid by particular types of the households per capita in 2014

Calculation of the average monthly excise duty amount paid by particular types of the households per capita in 2006

Person concentration coefficient (K) for the years 2006 and 2014

Conclusions In the years 1993 – 2014 the excise duty is even over-shifted on the households. The households in Poland in the years 2006 and 2014 with the relatively lower available income (particularly pensioners and farmers) are clearly taxed with relatively higher burden. The excise duty decreases the concentration of available income between analyzed types of the households very slightly. We need futher investigations in other Member States.

Excise on electricity as an EU own resource in the light of sustainable development Maciej Cieślukowski Poznań University of Economics and Business Department of Public Finance