Environmentally-related taxation and revenue potential for Portugal · 2013-05-02 · Electricity 83 166 166 166 Align to Spain and Greece Gas 30 60 60 60 Align to Spain Carbon tax;

European Environment Agency

Environmentally-related taxation and revenue potential for Portugal


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


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


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


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


Environmental tax revenues of GDP 2009


“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)


Interrelations:

• The world is running short of resources

• Recession is linked with energy and climate crisis


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


• 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


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)


Relative benefits with fiscal crisis - energy taxes have best performance


•Broadening tax base with environmentally-related taxes

•Remove environmentally harmful subsidies

•Move towards full-cost user charges for environmental services

Environmental fiscal reform


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


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


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


Company cars: registrations in EU


Tax expenditures on company cars


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


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


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


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!


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


Thank you for your attention

http://www.eea.europa.eu

Documents

Environmentally-related taxation and revenue potential for Portugal · 2013-05-02 · Electricity 83 166 166 166 Align to Spain and Greece Gas 30 60 60 60 Align to Spain Carbon tax;