Environmental taxes for the EU? opportunities and risks Dr. Pendo Maro EU Policy Officer, Environmental Policy Integration European Environmental Bureau (EEB) Financing the EU: where does, could and should the money come from? An NGO lunch debate May 21, 2008 EU Civil Society Contact Group; Social Platform Brussels.

Structure of presentation Introduction: EEB, self Introduction: EEB, self Introduction: environmental taxes Introduction: environmental taxes Examples in EU Examples in EU Uses of revenues Uses of revenues Environmental tax reform Environmental tax reform EEB’s work on environmental tax reform EEB’s work on environmental tax reform Conclusion: tax for EU budget? Conclusion: tax for EU budget?

Introduction EEB: federation of over 145 environmental citizens’ organisations in EU 27, candidate countries and neighbours EEB: federation of over 145 environmental citizens’ organisations in EU 27, candidate countries and neighbours Aim: to protect and improve EU’s environment, through citizens by promoting environmental policy integration (EPI) and sustainable (development) policies at EU level Aim: to protect and improve EU’s environment, through citizens by promoting environmental policy integration (EPI) and sustainable (development) policies at EU level Work: working groups of members, position papers, representation at EU Commission, European Parliament and Council Work: working groups of members, position papers, representation at EU Commission, European Parliament and Council My work: EPI - integrating economic instruments into environment policy, subsidy reform, indicator for societal progress, following development of IA methodology, relevant energy and transport dossiers; Lisbon National Reform Programmes,… My work: EPI - integrating economic instruments into environment policy, subsidy reform, indicator for societal progress, following development of IA methodology, relevant energy and transport dossiers; Lisbon National Reform Programmes,…

Environmental taxes: introduction Definition: several, no formal agreement: Definition: several, no formal agreement: General: taxes intended to promote ecologically sustainable activities via economic incentives; with or without regulatory approaches General: taxes intended to promote ecologically sustainable activities via economic incentives; with or without regulatory approaches Eurostat, 2001: a tax whose base is a physical unit … of something that has a proven, specific negative impact on the environment. Eurostat, 2001: a tax whose base is a physical unit … of something that has a proven, specific negative impact on the environment. But: No account of intention of tax, only what being taxed But: No account of intention of tax, only what being taxed Purpose: part of market-based instrument, used to internalise external env costs; price signal stimulate producers and consumers to limit env pressure, move towards sustainable use of natural resources – promotes ‘Polluter Pays Principle’. Used as revenue generating tool Purpose: part of market-based instrument, used to internalise external env costs; price signal stimulate producers and consumers to limit env pressure, move towards sustainable use of natural resources – promotes ‘Polluter Pays Principle’. Used as revenue generating tool

Environmental taxes and charges Energy taxes: Energy Tax Directive; sets min env tax rates for fuels in all MS; Germany rise in petrol Energy taxes: Energy Tax Directive; sets min env tax rates for fuels in all MS; Germany rise in petrol CO 2 taxes: no EU law; Member State e.g. Finland, Denmark, Germany, NL, Estonia CO 2 taxes: no EU law; Member State e.g. Finland, Denmark, Germany, NL, Estonia Pollution: levy on NO X e.g. France, Italy, Sweden; SO 2 levies e.g. Denmark, Norway, Sweden Pollution: levy on NO X e.g. France, Italy, Sweden; SO 2 levies e.g. Denmark, Norway, Sweden Agriculture: taxes/charges on pesticides e.g. Denmark, Norway, Sweden; on fertilizers e.g. Denmark Agriculture: taxes/charges on pesticides e.g. Denmark, Norway, Sweden; on fertilizers e.g. Denmark Products: e.g. batteries in Belgium, Bulgaria, Lithuania,, Sweden Products: e.g. batteries in Belgium, Bulgaria, Lithuania,, Sweden Waste: user charges in most MS; hazardous waste taxes: e.g. Belgium, DK, France, Germany, Poland, Finland Waste: user charges in most MS; hazardous waste taxes: e.g. Belgium, DK, France, Germany, Poland, Finland Water: user charges in most MS Water: user charges in most MS Other taxes –e.g. tax on electronic and electronic waste Other taxes –e.g. tax on electronic and electronic waste

E.g. Uses of revenues CO 2 /energy tax: general budget or reduce labour costs e.g. Germany, NL, UK CO 2 /energy tax: general budget or reduce labour costs e.g. Germany, NL, UK NO X charge in Sweden: recycled to liable payers NO X charge in Sweden: recycled to liable payers Landfill tax revenues in France: recycled to municipalities; in Austria funds clean-up of contaminated sites; in UK used to reduce social contributions and support environmental projects; Norway to general budget Landfill tax revenues in France: recycled to municipalities; in Austria funds clean-up of contaminated sites; in UK used to reduce social contributions and support environmental projects; Norway to general budget Batteries tax in Belgium: funds Belgian batteries collection and recycling scheme Batteries tax in Belgium: funds Belgian batteries collection and recycling scheme etc etc

Environmental Tax Reforms Emphasis is on shift of tax from ‘goods’ (e.g. labour, etc) to ‘bads’ (e.g. Pollution, natural resource degradation, etc) Emphasis is on shift of tax from ‘goods’ (e.g. labour, etc) to ‘bads’ (e.g. Pollution, natural resource degradation, etc) Fiscal reform: includes removal of environmentally harmful subsides Fiscal reform: includes removal of environmentally harmful subsides ETR in EU Germany, : tax shift from social security contributions to energy; Sweden, : from personal income tax and social security to env and energy taxes, CO2 and SO2; Austria 2004: from personal income and corporate tax to energy tax ETR in EU Germany, : tax shift from social security contributions to energy; Sweden, : from personal income tax and social security to env and energy taxes, CO2 and SO2; Austria 2004: from personal income and corporate tax to energy tax

EEB’s work on ETR “Make the market work for the environment” Environmental Tax Reform since 2001: Campaign for 10% Tax Reform in 10 years - shifting taxation burden away from welfare-negative taxes (e.g. labour) to energy and natural resource use and pollution; environmental harmful subsidy reform; tax neutrality Environmental Tax Reform since 2001: Campaign for 10% Tax Reform in 10 years - shifting taxation burden away from welfare-negative taxes (e.g. labour) to energy and natural resource use and pollution; environmental harmful subsidy reform; tax neutralityObjectives: Changing consumption and production patterns towards greater sustainability Changing consumption and production patterns towards greater sustainability Raising awareness; promote effective EU-wide ETR Raising awareness; promote effective EU-wide ETR

Conclusions: Tax revenues for EU budget? Difficult to dictate to national govts what to do with revenues, already used for diff purposes Difficult to dictate to national govts what to do with revenues, already used for diff purposes At EU level taxation requires unanimity – main obstacle to EU taxation At EU level taxation requires unanimity – main obstacle to EU taxation To counter unanimity: Open method of coordination To counter unanimity: Open method of coordination Emphasis should be on tax shift and budget neutrality, including off-setting negative social effects of taxes Emphasis should be on tax shift and budget neutrality, including off-setting negative social effects of taxes