Green taxation and other economic instruments: Internalising environmental costs to make the polluter pay (original) (raw)
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Environmental Tax Reform in the European Union: Impact on CO2 Emissions and the Economy
Zeitschrift für Energiewirtschaft
Economic instruments in environmental policy try to correct prices in order to internalise externalities. The environmental tax reform is a specific policy approach, which raises taxation of ‘bads’ such as resource use or emissions and reduces other taxes on ‘goods’ such as labour that are felt as a burden so that the total tax revenue remains constant. On a small scale some European countries introduced this instrument, and the results have been evaluated broadly positive by the literature. The paper at hand gives answers to the question, what might happen to CO2 emissions and the economy, if this instrument would be used in all European countries in a scale that allows reaching the European CO2 emission targets. The instrument of the analysis is the global economy-energy-environment model GINFORS. The simulation results show that the targets can be met with only small losses in GDP and gains in employment. Ökonomische Instrumente der Umweltpolitik versuchen die Preise so zu korrig...
2019
Climate change is a critical issue of our days. In an effort to tackle climate change, Europe has set ambitious targets and policy designs. A significant aspect of EU’s strategy for the mitigation of climate change is the implementation of environmental taxation and environmental tax reforms, in order to correct externalities and to influence a change of economic agents’ behaviors towards polluting products and activities. Green taxes have a dual purpose, to protect the environment and social welfare and to raise revenues for the governments, as any tax. Under this prism, environmental tax reform could be enforced in a revenue-neutral scheme, where the increase of taxes levied on polluting activities or on excessive resource use could offset the reduction in income, labor taxes and social contributions. In the first part of this thesis, the emphasis is given in the theory of environmental taxation and ETR, as well as the current status of environmental tax revenue in Europe. The second part comprises of a statistical analysis of CO2 emissions and environmental tax revenues in terms of GDP, of six EU countries. Then, an econometric approach follows, testing the causal relation between the two variables.
Since the Kyoto Protocol entered into force in February 2005, many Parties to the Protocol have shifted their domestic policies into high gear to achieve the quantitative reductions in greenhouse gas emissions undertaken for the period from 2008 to 2012. While the basic design of environmental taxation in European countries has received widespread attention, its actual performance has not been systematically assessed. This report aims at examining, against pre-determined criteria (e.g. impact on costs and prices, competition and trade, environmental impacts and recycling mechanisms), how effectively environmental taxation systems are functioning. Most importantly, the report analyses the political dynamics behind these systems and how they have changed the ‘optimal’ tax design into a ‘politically feasible’ tax design.
Environmental Taxes and Emissions of Pollutants in the Eu: Empirical Analysis
2021
The system of environmental taxes in EU countries is expected to have an impact on reducing greenhouse gas emissions. Since 2010 the emphasis on environmental regulation has shifted towards the EU 2020 strategy. This research continues the previous author’s studies about the environmental measurement of welfare economics. The article tests the hypothesis of the inverse effect of the environmental taxation level on CO2 emissions. The method of cross-correlation analysis was used to confirm the hypothesis. As the dependent variables were chosen emission indicators (CO2, PM2.5mg), and the independent variables were selected environmental taxes, the share of renewable energy, the number of businesses in the country that have an environmental certificate ISO 14001. The level of environmental taxation has a significant impact on the amount of CO2 emissions in the direction of their reduction. The share of renewable energy in final consumption also has a significant impact on the dynamics ...
Public finance and management, 2003
Abstract: This paper provides an overview and a discussion of environmental taxes in Europe. On the whole, most European countries have fairly high levels of environmental taxation-at least compared to the US. This appears broadly speaking to be true of both tax ...
Environmental Tax Reform in Europe: Opportunities for the future
There is growing use of environmental taxes in Europe and a new momentum behind the environmental tax reform (ETR) agenda. When carefully designed such instruments can support economic (e.g. government revenues, innovation, employment), social (e.g. health, income distribution) and environmental (e.g. efficient resource use, energy security) objectives. How these instruments are designed influences their effectiveness and overall impact, which to date has been relatively small, leading to marginal changes in the tax system and incentives in the economy as a whole. There remains scope for the wider application and more effective use of such instruments, however progress is often held back by various obstacles including concerns over competitiveness impacts, public resistance to new taxes and the political costs of action. In some cases, a country’s efforts on environmental taxation have been hindered or complicated by a lack of action in others. Against this backdrop, the Ministry of...
Environmental taxation in the European Union—Analysis, challenges, and the future
Journal of Renewable and Sustainable Energy, 2013
In this paper, the authors intend to show that environmental taxes are an economic instrument that entirely supports the principles of sustainable development and has impact on balanced improvement of all its four pillars (economic, ecological, social, and institutional). Environmental taxes provide a flexible and cost-effective means for reinforcing the polluter-pays principle and for reaching environmental policy objectives. Enforcement of environmental taxes (and penalties) simultaneously generates multiple values-it stimulates ecologically acceptable production, generates budget revenue, and stimulates socially responsible behavior. The subject of the analysis is determination of environmental taxes in the European Union (EU) member states in total amount and as a percentage of Gross Domestic Product (GDP), as well as monitoring of their trend in the period 2005-2010. To obtain a broad picture, results collected for EU-27 region have been compared with data for sample countries worldwide, including Brazil, Russia, India, China, and South Africa (BRICS) countries. The revenue from environmental taxes in the EU-27 is not negligible, amounting to about 3% of total revenues. The highest tax revenue as a percent of GDP was noted in Denmark-9% on average. Environmentally related revenues and their percent of GDP in sample countries reported diverse results. In the USA, China, and India, environmentally related revenue as a percent of GDP stood at around 1%, with a downward trend in time. The highest tax revenue as a percent of GDP was recorded in Turkey, Russia, South Africa, and Brazil, 4% on average, with an upward trend in time. However, increasing revenues from environmental taxes should be interpreted with caution. The increases may be caused by the introduction of new taxes or an increase in tax rates, or alternatively may be linked to an increase in the tax base. V
Global implications of a European environmental tax reform
Environmental tax reform (ETR) can be used as an instrument to reduce the EU’s resource consumption as well as its CO2 emissions and thus achieve more sustainable and responsible development by taking into account the external costs of consumption and production. So far, experiences with ETR have been limited and small in scale. This paper analyses the potential economic and environmental implications of an ambitious and far-reaching ETR on the EU and its trading partners. It finds that unilateral action by the EU only makes a small contribution to EU resource security and is insignificant in terms of global environmental sustainability. A larger ETR in the EU in the context of global cooperation produces more substantial results, reducing global material extraction by around 5% and global CO2 emissions by more than 15%, while reducing world GDP by only 1.4%. The results show that in a cooperative global context, the economic impacts on the rest of the world of a major ETR in Europe are small but that the environmental benefits can be significant.
Environmental taxation in Europe: What does it depend on?
Cogent Economic & Finance, 2, 967362, 2014
The present work adds to the existing literature the analysis of the determinants of environmental taxation in European economies. Using a pooled panel data, we consider various groups of factors influencing environmental taxation referring to production and consumption, environmental performance and the quality of governance of European countries, taking into account their heterogeneity. We argue that in order to function, environmental taxation policy should rely on the virtuous interrelationship between economic development and institutional enforcement, which contributes to enhancing the process of environmental renaissance.