1. Monetary Environmental Accounts: Environmental Taxes European Statistical Training Programme (ESTP): Monetary Environmental Accounts Vienna, Austria, 3-5 September 2018 Julie L. Hass, Ph.D.
THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

2. Outline
Part 1. Definition of environmental taxes and the 4 categories of environmental taxes
Part 2. Four of the five steps in developing statistics on Environmental Taxes
Part 3. Reporting requirements and Step 5
Part 4. Quality Reports
Part 5. Country webpage (NL) and OECD links

3. Part 1. Environmental Taxes

4. Taxes in the national accounts
What does this mean?
Taxes in the national accounts
Definition of Taxes from 2010 ESA (§4.14)
‘taxes on production and imports (D.2) consist of compulsory, unrequited payments, in cash or in kind, which are levied by general government, or by the institutions of the European Union…’
Categories of taxes in ESA 2010 (Chapter 4):
Taxes on Products (D.21)
Other taxes on production (D.29)
Taxes on income and wealth (D.5)
Other current taxes (D.59)
Capital taxes (D.91)

5. Which of the following are ‘unrequited payments’?
Waste water treatment payments
Gasoline taxes
Fees paid for drinking water
Fishing and hunting permits

6. Definition and categories of Environmental Taxes
Definition: An environmental tax is... «A tax whose tax base is a physical unit (or a proxy of a physical unit) of something that has a proven, specific negative impact on the environment, and which is identified in ESA as a tax.» (Eurostat Environmental Taxes – a Statistical Guide 2013, p.9, Regulation (EU) No. 691/2011 (‘environmentally related taxes’), also SEEA-CF 2012, §4.150)

7. Table 1. Environmental Tax Bases Eurostat Env Taxes Manual 2013, p
Energy
Energy products for transport
Energy products for stationary purposes
Greenhouse gases
Transport (excluding fuels for transport)
Pollution
Resources

8. Categories of environmental taxes (SEEA-CF 2012, §4
Categories of environmental taxes (SEEA-CF 2012, §4.155, Eurostat Env Taxes 2013, pages 11-17)
Energy Taxes
Taxes on energy products used for both transport and stationary purposes
Taxes on carbon and sulphur are included under «energy taxes» rather than pollution taxes. Emission trading schemes (Emission trading schemes (CO2, SOx)).
Transport Taxes
Mainly taxes related to the ownership and use of motor vehicles, plus taxes on other types of transport (planes) and transport services, road taxes are also included.

9. Categories of environmental taxes (SEEA-CF 2012, §4
Categories of environmental taxes (SEEA-CF 2012, §4.155, Eurostat Env Taxes 2013, pages 11-17)
Pollution Taxes
Taxes on measured or estimated emissions to air and water, and generation of solid waste.
Resource Taxes
Taxes on water extraction, hunting and fishing licenses, extraction of raw materials and other resources (e.g. sand and gravel), NOT oil and gas extraction.

10. Taxes that are EXCLUDED:
Value Added Tax
Land taxes
Taxes that should be treated as rents on sub-soil assets (‘Rent’ is considered property income, in ESA coded as D.45 Rent and not a ‘tax’)
Alcohol, tobacco and similar consumption taxes, and taxes on income and on labour

11. Questions?

12. Part 2. Developing statistics on Environmental Taxes: 5 Steps
Identify environmental taxes and establish a list of environmental taxes.
Classify the environmental taxes into the 4 categories of environmental taxes.
Collect revenue data on these taxes
Allocate the revenue data to the environmental tax categories.
Allocate the revenues to the economic activities paying the taxes.

13. Step 1. List of National Taxes
Obtain a list of all of your national taxes from the Ministry of Finance or other source with as detailed a description as possible for each of the taxes on the list.
Check with the national accounts to make sure that the list does not exclude items that are defined as «taxes» in the national accounts or include items that are NOT defined as «taxes» in the national accounts – which are for example, «fees» or «royalties».
Check the NSO’s ‘National tax list’ – more detailed?

14. Step 2. Evaluate and classify
Evaluate the different tax descriptions – to determine if the tax bases are/are not included in the definition of «Environmental Taxes»
Sort/classify each tax that is defined as an environmental tax into one of the 4 environmental tax categories (energy, transport, pollution, resource)

15. Eurostat national tax list
ESA codes (column “A”) D.2: TAXES ON PRODUCTION AND IMPORTS D.21: Taxes on products D.211: Value added type taxes (VAT) D.212: Taxes and duties on imports excluding VAT D.214: Taxes on products, except VAT and import taxes D.29: Other taxes on production D.5: CURRENT TAXES on INCOME, WEALTH, ETC. D.59: Other current taxes

16. Let’s examine a country’s National Tax List (NTL) - 1
First sheet “VAL_Explanatory notes”
Find the environmental tax codes – see cell I19
Codes: T - Transport tax E - Energy tax P - pollution tax RS - resource tax

17. Let’s examine a country’s National Tax List (NTL) – 2
Choose a country’s NTL – use your own if possible
Find column “K” – Highlight column
Click on and choose “filter”
Choose the drop-down menu here:
Put checks only in boxes for E or T or P or RS
Examine the portion of the NTL that comes up

18. Austria… sheet “AT”

19. With help from national accounts… Examine items with Code D45 “Rent”
D45 is supposed to be for resource rent / royalties
Payments for use of Resources can be miscoded – should perhaps be D29
This is NOT on the ‘NTL’
Look at all different types of payments related to resources – use – licenses – permits – fees
Get this information from government statistics or national accounts

20. List from Norway (1 of 8)
Energy products (including fuel for transport)
Energy products for transport purposes
Unleaded petrol
Leaded petrol
Diesel
Other energy products for transport purposes (e.g. LPG or natural gas)

21. List from Norway (2 of 8) Energy products for stationary purposes
Light fuel oil
Heavy fuel oil
Natural gas
Coal
Coke
Biofuels
Electricity consumption and production
District heat consumption and production
Other energy products for stationary use

22. List from Norway (3 of 8) Greenhouse gases Carbon content of fuels
Emissions of greenhouse gases (including proceeds from emission permits recorded as taxes in the national account)

23. List from Norway (4 of 8) Transport (excluding fuel for transport)
Motor vehicles import or sale (one off taxes)
Registration or use of motor vehicles, recurrent (e.g. yearly taxes)
Road use (e.g. motorway taxes)
Congestion charges and city tolls (if listed as taxes in national accounts)
Other means of transport (ships, airplanes, railways, etc.)
Flights and flight tickets
Vehicle insurance (excludes general insurance taxes)

24. List from Norway (5 of 8) Pollution - 1
Measured or estimated NOx emissions
Measured or estimated Sulphur emissions
Other measured or estimated emissions to air (excluding CO2), for example particulates
Ozone depleting substances (e.g. CFCs or halons)

25. List from Norway (6 of 8) Pollution - 2
Measured or estimated effluents to water
Measured or estimated effluents of oxidizable matter (BOD, COD)
Other measured or estimated effluents to water
Effluent collection and treatment, fixed annual taxes
Non-point sources of water pollution
Pesticides (based on e.g. chemical content, price or volume)
Artificial fertilizers (based on e.g. phosphorus or nitrogen content or price)
Manure

26. List from Norway (7 of 8) Pollution - 3 Waste management
Collection, treatment or disposal
Individual products (e.g. packaging, beverage containers, batteries, tires, lubricants)
Noise (e.g. aircraft take-off and landings)

27. List from Norway (8 of 8) Resources Water abstraction
Harvesting of biological resources (e.g. timber, hunted and fished species)
Extraction of raw materials (e.g. minerals, oil and gas)
Landscape changes and cutting of trees

28. Questions? About your own country’s taxes/environment taxes?
Other questions?

29. A closer look at some of the more challenging bits…What is in. and out
A closer look at some of the more challenging bits…What is in? and out? Or if there is no “national tax list”

30. Sales of Goods and Services
What’s OUT…
Payments for the provision of government services – such as waste and wastewater treatment – are considered “fees” NOT taxes since the purchaser has received a service from the government in return for the payment.

31. Fines and penalties What’s OUT…
- Fines and penalties are compulsory payments imposed on institutions by courts of law or quasi-judicial bodies (2008 SNA §8.135)
- These are not treated as taxes but as miscellaneous current transfers.

32. Resource Rent and Leases
What’s OUT…
- Payments of rent are commonly called Royalties.
- Rent is a payment due in one accounting period, leases are payments that are longer term. Both are excluded.

33. SNA boundary vs national territory Adjusting for residence principle
Resident units in national territory
+ resident units in RoW
Foreign units on national territory – Report separately!

34. SNA & Environmental Accounts
Difference between SNA boundary and territory boundary (Main difference is usually international transport)
Residents
Non-Residents
National Territory X
Rest of World
Examples: UNFCCC Emissions Inventory, IEA/ Eurostat Energy balances
SNA & Environmental Accounts
Subtract these in ESA/SNA
Report separately in Env Taxes
Add these!

35. Adjustments to residence principle
Main difference is international transport
Fuels are the main products purchased by non-resident units in the country and by resident units outside the country.
Use the Energy Flow Accounts to allocate taxes paid by non-residents
REPORT the payments of taxes by non-residents in Questionnaire Row 70 (code n_r)

36. Emissions Trading What’s IN…
Emissions Trading Schemes (SEEA-CF 2012, § , Eurostat 2013 Env Tax manual Section 2.5, p. 15)
Defined as a “tax” in the National Accounts
- For Greenhouse gas emissions: energy taxes
- For other types of emissions: pollution taxes

37. How does this work? ISWGNA guidance:
The payments for emission permits, issued by governments under cap and trade schemes, should be recorded at the time the emissions occur as taxes, specifically other taxes on production (D29), on an accrual basis.

38. Emissions permits are a Pre-paid tax
The timing difference between the payments received by government for the permits and the time the emission occurs gives rise to a financial liability (accounts payable) for government and a financial asset (accounts receivable) for the holder.
The difference between the pre-paid tax value of the permit and the market value of the permit represents a marketable contract (non-produced nonfinancial asset) for the holder.

39. Resources for ETS
SNA News and Notes
Eurostat MGDD - chapter VI.5 on emission trading allowances, pages NOTE: Under revision
Eurostat 2013 Env Taxes manual: Section 2.5

40. Norway’s ETS methodology
Only include purchases of emission permits by resident units
Starting point is all of the quotas that are handed in by enterprises in the period.
For each enterprise (Number of quotas handed in) – (Free quotas given by government) = (number of quotas purchased)

41. Norway’s ETS methodology – cont.
For units that have received more quotas than are needed to cover emissions, number of purchased quotas = 0
(Number of purchased permits) * (weighted average market price from the international exchange, InterContinental Exchange (ICE)) = TOTAL AMOUNT PAID FOR QUOTAS
At this time no method has been developed to adjust to an accrual approach

42. Questions?

43. Step 3. Obtain revenue figures
Obtain revenue figures for each of the different taxes as well as a figure for total tax revenues.
Figures can be from…
National Accounts or
Government Finance Statistics or
Ministry of Finance

44. Adjustments
Time adjusted cash (TAC) method used for taxes paid with a regular time lag.
If initial data sources are national accounts or are adjusted to match NTL, then no further adjustments needed.

45. Step 4. Allocate revenue to environmental tax categories
Total Environmental Taxes in Sweden, , current prices, SEK million
2010
2011
2012
2013
2014
2015
2016*
2017*
Total
91,320
87,952
88,556
89,064
86,759
92,891
98,000
98,586
Energy Taxes
73,619
70,931
71,792
71,530
68,858
72,944
77,094
76,804
Tax on Pollution
1,148
1,137
995
886
959
1,047
1,051
1,696
Tax on natural resources
153
163
167
146
138
147
157
161
Tax on transportation
16,400
15,721
15,602
16,502
16,804
18,753
19,698
19,925
*Preliminary data
This far is reported by national accounts alongside T9 reporting
Source:

46. Two main indicators – What do they tell us?
Typically the indicators calculated include:
Ratio of Total Environmental Taxes to GDP
Ratio of Total Environmental Taxes to total taxes and social contributions (excluding imputed social contributions)

47. Total Environmental Taxes in Sweden, 2010-2017, current prices, SEK million
2011
2012
2013
2014
2015
2016*
2017*
Total
91,320
87,952
88,556
89,064
86,759
92,891
98,000
98,586
Energy Taxes
73,619
70,931
71,792
71,530
68,858
72,944
77,094
76,804
Tax on Pollution
1,148
1,137
995
886
959
1,047
1,051
1,696
Tax on natural resources
153
163
167
146
138
147
157
161
Tax on transportation
16,400
15,721
15,602
16,502
16,804
18,753
19,698
19,925
Percent of GDP in Sweden
2.59
2.41
2.40
2.36
2.20
2.21
2.22
2.14
Percent of total taxes and social contributions
5.93
5.58
5.57
5.43
5.11
5.07
4.99
4.82
*Preliminary data
Source:

48. Green taxes / total taxes & contrib provide information about greening
Efforts to “green” the taxation policies include…
Shifting taxation from labour to consumption
Increasing the share of revenues
But if the ratio is increasing – it is not always showing “good” developments.

49. Percent of GDP shows… “Burden” on the economy
In Sweden… 2.6 – 2.1 per cent of GDP
Decreasing trend

50. Environmental tax revenues as share of total tax revenues & relative to GDP
2016
Percent
Source: Eurostat

51. Questions?

52. Part 3. Before going to Step 5, Examine Reporting Requirements
Regulation (EU) No 691/2011 of the European Parliament and of the Council of 6 July 2011 on European environmental economics accounts.
Deadline:30 September – Annual at T+1.75
Questionnaire
Quality Report

53. Questionnaire – reporting requirements and format
Methodology page of Environmental Accounts:
Environmental Taxes Manual:
Questionnaire (2018) on CIRCABC:
SDMX data transmission from 2019 onwards

55. Report: Energy Taxes – 3 tables
NACE Rev.2, A64 + HH + Non-resident + not allocated
NACE Rev. 2, A9 (1-letter) only – not HH, non-residents
CO2 Taxes (including emission trading schemes – ETS)

56. Report 2 tables each for…
Transport taxes
Pollution taxes
Resource taxes
NACE Rev 2 – A64
NACE Rev 2 – A9
Table with A9 is auto-calculated and excludes… (1) ‘Households’, (2) ‘Non-residents’, and (3) ‘Not allocated’

57. Questions?

58. Now that we know the reporting requirements… Here comes the challenging part!

59. Step 5. Allocate tax revenues to the economic activities (NACE/ISIC) that pay the taxes
Needs to be done for EACH tax!
May need a different distribution ‘key’ for each different tax!

60. How to develop a distribution key…
Take a total and assign it to various categories
What percent or fraction does each category get?

61. You have total revenues by tax – how do you assign to the different NACE?
Not just one “key” – need to develop for EACH tax
Exempt? then portion of whole = 0
Only 1 industry or only HHs = 100%
Tax on products used… SUTs - if you can find that specific product, or know which industries use it
Tax on production – then only industries that produce that product would pay the tax
Energy Accounts, vehicle registers, fuel purchases, VAT registers, +++

62. Example 1. Perchloroethylene
New tax on use of perchloroethylene…
Used in dry cleaning of clothes
Find the appropriate ISIC/NACE category
ISIC Rev 4/NACE Rev 2: Washing and (dry-) cleaning of textile and fur products

63. Example 2. Transportation
Tax on vehicle ownership
Who owns the vehicles?
Identify owners in vehicle register
Connect vehicle register to business register to assign NACE industry code / HH to ownership
Ownership and annual taxes may differ if do not have to pay annual tax if not using vehicle

64. Example 3. Petrol/Gasoline
Tax on gasoline used in automobiles
Tax is collected by the gasoline stations who then pay it to the government Are gasoline tax revenues assigned to ISIC/NACE Retail sale of automotive fuel in specialised stores?
No!
Assign…to those who used it! (proxy: Purchases)
Vehicle register… ownership but not use
SUTs, energy accounts (not energy balance!)

65. Questions?

66. Part 4. Quality Reports Relevance Accuracy Timeliness and punctuality
Accessibility and clarity
Comparability and coherence
Explain how compiled under this section

67. Quality Reports
Most challenging is the last section – where you need to explain the methodology.
Which means the distribution methodology for each of the taxes.
The previous quality reports are your sources of information for what needs to be improved.
Typically – distribution keys need improvement and emission trading scheme

68. https://circabc. europa

69. Quality reports – Austria and Norway
Norway – 2017

70. Questions?

71. Example of Country website
Netherlands NOTE:
Taxes and Fees (national use – fees are not taxes)
Non-residents in the Netherlands (adjustment)
Does NOT include environmental domains

73. Links to OECD information: environmental taxes and other instruments – be careful with definitions… can be different!
Environmental Taxation
Data for environmental taxes by country and by type of environmental tax
Database on policy instruments for the environment

74. Where to find the OECD data…

75. Thank you for your attention!
Eurostat contact:
Julie L. Hass, Ph.D. Independent Consultant and Statistics Norway