1. Study on Environmental Fiscal Reform Potential in 12 Member States: the case of Belgium CCIM Stakeholders Workshop Eco-Fiscality 08 July 2014, Brussels
Jonathan Parker & Louis Meuleman European Commission – DG Environment

2. Context Two overarching environmental objectives
Improve environmental integration (Art. 11 TFEU) in economic governance
Transition to a circular economy (7th EAP), including resource efficiency (Flagship EU2020), recycling and redesign. Package of measures adopted by the Commission including the Green Employment Initiative:

3. Comm. Staff Working Documents 2014 – 22 Env. Tax; 13 rem.EHS
Context
ENV/Climate CSRs in Semester 2014
Proposed by Comm , endorsed European Council , to be adopted ECOFIN Council
Issue in CSR(s) 2014
Nr of MSs
Env tax shift
8 (incl. BE)
Increase env friendliness of tax system 2
Removal env harmful subsidies(EHS)
3 (incl. BE)
Congestion
2 (incl. BE)
Waste 1
Reduction of non-ETS GHG
Energy efficiency 11
Renewable energy 3
Energy networks 9
Comm. Staff Working Documents 2014 – 22 Env. Tax; 13 rem.EHS

4. Environmental fiscal reform (EFR) study report published 03.03.2014
(12 MS-cases: AT, BE, HR, CZ, EE, FR, HU, LT, PL, RO, SK, (IT = update)
Builds on approach of EEA for 4 MSs (ES, IE, IT, PT)
Focus on the potential of EFR
The CSRs & the case studies trigger national discussions
Seminar in IT on EFR and flooding ; NL ('coalition of the willing on EFR'); BE
EFR new study report
(14 MS-cases: BG, CY, DK, FI, DE, EL, IE, LV, MT, NL, SI, ES, SE, UK)
20 weeks study

5. Share of environmental taxes in total taxes (%)
EU-15/EU-27
1995
2000
2008
2012
Energy taxes
5.33
5.10
4.38
4.55
Transport taxes
1.36
1.33
1.31
1.21
Pollution/resource taxes
0.18
0.20
0.21
0.25
Environmental taxes
6.87
6.63
5.89
6.05

6. Environmental taxes in 2012 (%)

7. Share of environmental taxes in total taxes in 2012 (%)

8. Study approach for the 12 Member States in a nutshell
Desk Review, data gathering, review of reports
Identification of Good Practice to make comparisons of potential for EFR, for example:
Energy Taxation – minimum excise rates in the proposed amendment to the Energy Taxation Directive (2011)
Vehicle taxation – Commission proposal on car related taxes (2005) & Eurovignette Directive (2011)
Waste taxes – landfill (€50 per tonne); incineration (€15 per tonne, which is the FR rate)
Air pollution taxes – up to DK levels
Water abstraction taxes – DK levels for households & NL levels for businesses
Modelling taking into account price elasticities/literature to show potential
Estimate of environmental benefits of implementing EFR measures – in BE around €0.5 billion (real 2013 terms) or 0.11% of GDP in 2025

9. EU12 additional Revenues, Energy - 2025

10. EU12 additional Revenues, Transport (excl. transport fuels) - 2025

11. EU12 additional Revenues, Pollution and Resource Taxes - 2025

12. EU12 additional Revenues, Summary by Type - 2025

13. EU12 Environmental Taxes v EHSs removal - 2025

14. Env. Taxes in 2011 and Potential for Increase

15. Study headline results for EU12 and Belgium
EU12: additional revenue from environmental taxes could generate an additional €35 billion in 2016 rising to €101 billion in 2025 (both in real terms). Equivalent to 0.63% and 1.57% of GDP in 2016 and 2025 respectively.
BE: additional revenue from environmental taxes could generate an additional €2.2 billion in 2016 rising to €6.9 billion in 2025 (both in real 2013 terms). Equivalent to 0.54% and 1.51% of GDP in 2016 and 2025 respectively.
EU range 2025 EFR – AT 1.01% to RO 2.51%.
EU12: the removal of environmentally-harmful subsidies could lead to €24 billion in 2016 (real 2013 terms), equivalent to 0.43% of GDP.
BE: the removal of environmentally-harmful subsidies could lead to €7 billion in (real 2013 terms), equivalent to 1.8% of GDP. Large part of this figure is attributed to high-level of subsidy related to favourable treatment of company cars in tax system.

16. Summary
Plenty of scope for increased revenues
Indicates a range of suggested changes
Member States to consider / work up preferred options
Contributes to meeting Country Specific Recommendations
Good practice

17. Some final reflections
Tax shift potential labour to environment is usual assessed on basis of i) relative level of labour taxation and ii) relative level of environmental taxation. Thought: consider also other criteria namely: relative unemployment rate and resource productivity/intensity.
Circular economy is labour intensive (jobs for maintenance, repair and redesign), hence can bring down unemployment – "repairing broken TVs" (Green Week session, )
'Nudging' is essential for successful shifting – includes explaining business potential of circular economy.
Not to alienate citizens. Green jobs should be decently paid. Provide alternative public transport if air pollution tax or road charging introduced.

18. Website supporting the Expert Group Greening the European Semester:
Studies 'library'
Best practices