1. Hilfs- linien Füllung weiß/ keine Füllung 07/09/2015 1 Stefan Speck 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’ Prague, 22 May 2008 Füllung weiß/ keine Füllung Kommunalkredit Public Consulting GmbH

2. Hilfs- linien Füllung weiß/ keine Füllung 07/09/2015 2 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

3. Hilfs- linien Füllung weiß/ keine Füllung 07/09/2015 3 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

4. Hilfs- linien Füllung weiß/ keine Füllung 07/09/2015 4 Structure of tax (incl. social security contributions) revenues as % of GDP in selected EU Member States in 2005 (source: Eurostat 2007) Czech Republic DenmarkEstoniaGermanyUKEU Indirect taxes11.917.913.512.113.313.8 - VAT7.210 8.86.26.86.9 Direct taxes9.331.47.110.316.813.2 - personal income4.624.65.68.610.59.2 Social contributions15.11.110.416.36.912.8 -paid by employers10.401073.97.3 - paid by employees3.61.10.36.42.94 Total tax revenues and SSC 36.350.43138.73739.7 Environment taxes2.85.82.22.5 2.6

5. Hilfs- linien Füllung weiß/ keine Füllung 07/09/2015 5 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)

6. Hilfs- linien Füllung weiß/ keine Füllung 07/09/2015 6 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