Environmental Fiscal Reform and its Contribution to a Green Economy - PowerPoint PPT Presentation

Environmental Fiscal Reform and it’s Contribution to a Green Economy Danish Practice, Lessons and Proposals Søren Dyck-Madsen The Danish Ecological Council EEB – Green Budget Europe Conference Madrid 26.11.09

Why Green the Tax System? • Taxation must be a driver of innovation – green markets must be created both by strict minimum rules and standards but also by getting the right price signals • Doing the right thing must pay off – ethics is not the only nor best instrument for saving the world • There is actually a double dividend EEB – Green Budget Europe Conference Madrid 26.11.09

Environmental Taxes for Energy, Transport and Pollution/Resources Revenue in % of GDP Denmark Source: Taxation trends in the EU, Eurostat 2007 EEB – Green Budget Europe Conference Madrid 26.11.09

Denmark has the Largest Variety of Green taxes in the EU EEA, 2006 EEB – Green Budget Europe Conference Madrid 26.11.09

Level of Danish Environmental Taxes 1970 – 2010 (Fluctuations mainly due to the number of new cars) Danish Green Tax Reform 1994 - 1998 Danish Tax Freeze 2002 - 2009 Source: Danish Ministry of Taxation EEB – Green Budget Europe Conference Madrid 26.11.09

Level of Danish Environmental Taxes 1990 – 2010 Change of Government 6 5 All Green Taxes Other Green Taxes 4 3 Tax Freeze Green Tax Reform 2002 - 2008 1994 - 1998 2 1 Car Registration Tax 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010* Source: Danish Ministry of Taxation EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Energy Taxes etc. Coal 312 Electricity 1.383 Natural Gas 570 Oil products 1.228 Petrol 1.154 Energy related Taxes all together 4.648 Danish EPA: Energy and Carbon taxes in Denmark has reduced the emissions of GHG / CO2 by around 10 % EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Motor Vehicles Taxation Annual Car owner Tax 1.478 Car registration tax 2.046 Insurance levy 272 Road use 58 Motor vehicles taxation all together 3.853 EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Very high Very Very Very high Danish high high Danish Danish Danish registration tax registration tax gives gives registration registration tax tax gives gives good good possibilities good good possibilities for possibilities possibilities for for for Motor Vehicles Taxation greening greening greening and for greening and for and for and for introducing electric introducing introducing introducing electric cars electric electric cars cars cars Annual Car owner Tax 1.478 Car registration tax 2.046 Insurance levy 272 Road use 58 Motor vehicles taxation all together 3.853 EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Environmental Taxes CO2 812 Sulphur SO2 11 Packaging 141 CFC's 7 Clorinated Solvents 0 Pesticides 64 Certain Growth Promotants 0 EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Environmental Taxes CO2 812 If you can If you can If you can � t ban If you can t ban t ban t ban Sulphur SO2 11 them � tax them them them them tax them tax them tax them Packaging 141 CFC's 7 Clorinated Solvents 0 Pesticides 64 Certain Growth Promotants 0 EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Environmental Taxes CO2 812 Voluntary agreements Voluntary Voluntary Voluntary agreements agreements agreements Sulphur SO2 11 not to not to use not to not to use them use use them them � but them but but but taxation is taxation taxation taxation is is kept is kept kept as kept as as as Packaging 141 security security security security CFC's 7 Clorinated Solvents 0 Pesticides 64 Certain Growth Promotants 0 EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Environmental Taxes Waste 37 Ressources 23 Sewage Water 28 Piped Water 185 Nikkel/cadmium Batteries 1 PVC and Phtalates 4 Nitrogen 3 EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Taxation around 10 % of Taxation around 10 % of Taxation around 10 % of Taxation around 10 % of Environmental Taxes consumer price but 100 % consumer price but 100 % consumer price but 100 % consumer price but 100 % on water spill on water spill on water spill on water spill Waste 37 Ressources 23 Sewage Water 28 Piped Water 185 Nikkel/cadmium Batteries 1 PVC and Phtalates 4 Nitrogen 3 EEB – Green Budget Europe Conference Madrid 26.11.09

Danish Green Taxes 2009 in mio. Euro Environmental Taxes Mineral Phosphorus 5 NOx 30 Environmental Taxes all together 1.351 (Tax on value added by planning changed land use from agriculture to urban purposes) EEB – Green Budget Europe Conference Madrid 26.11.09

The Danish Tax Shift in 1990’s Left Axis – Labour Taxes in % of GDP Right Axis – Green Taxes in %% of GDP EEB – Green Budget Europe Conference Madrid 26.11.09

Lessons learned from the Tax Shift • Two sides of the tax shift need massive information • It’s easy to see the higher prices on energy, and very difficult to see the reduction in labour taxation • Even though compensation for low income groups was done, this was not understood by the public nor Press • The Social democratic Government did not inform very much – and the Green tax shift was misused by the right wing parties in the election campaign in 2001 • This lead to the present Tax Freeze in Denmark EEB – Green Budget Europe Conference Madrid 26.11.09

Transport - Nordic Car Registration Taxes An An expensive An An expensive expensive car expensive car car � car with a short with with with a short a short mileage a short mileage mileage mileage Source: ”Taxing Transport and Climate Effect” The Danish Ecological Council and Norwegian and Swedish Societies for Nature Conservation, 2008 A cheap A cheap car car � with with a a A A cheap cheap car car with with a a long long mileage long long mileage mileage mileage

High Registration Tax means Less Private Cars and more Company Cars Private and Company Cars per 1000 Inhabitants Source: ”Taxing Transport and Climate Effect” The Danish Ecological Council and Norwegian and Swedish Societies for Nature Conservation, 2008 EEB – Green Budget Europe Conference Madrid 26.11.09

Taxes on Petrol and Diesel in EU Source: ”Taxing Transport and Climate Effect” The Danish Ecological Council and Norwegian and Swedish Societies for Nature Conservation, 2008 EEB – Green Budget Europe Conference Madrid 26.11.09

Less Cars in Denmark, but more Kilometres pr Car Average Driven Kilometres per Private Car Source: ”Taxing Transport and Climate Effect” The Danish Ecological Council and Norwegian and Swedish Societies for Nature Conservation, 2008 EEB – Green Budget Europe Conference Madrid 26.11.09

Surprise: Age of Cars do not Depend on the Registration Tax Private Cars Average Age Share more than 10 years Source: ”Taxing Transport and Climate Effect” The Danish Ecological Council and Norwegian and Swedish Societies for Nature Conservation, 2008 EEB – Green Budget Europe Conference Madrid 26.11.09

Some Proposals etc. EEB – Green Budget Europe Conference Madrid 26.11.09

Greening Private Property Taxation • Make Property Taxation Dependant of the Energy Certificate of the Building • Gives economic incentives for the owner to renovate the building to a better energy certificate • Gives energy certification more meaning Proposal made by DEC, but supported widely by the Danish Construction Association, The Danish Building Research Institute EEB – Green Budget Europe Conference Madrid 26.11.09

Greening of Transport Taxation • Green the Registration Tax for new vehicles • Shift part of the registration tax to road pricing – differentiating by the emissions of the car, congestion periods and geographical situation / reflecting the possibility for using public transport • Increase Taxation of Company Vehicles EEB – Green Budget Europe Conference Madrid 26.11.09

Energy Taxation due to Energy Price • Need a robust signal to use electricity, when the wind blows – and not to use electricity when wind is still • Economic incentives are increased if energy taxation (partly) follows the price of electricity • Will make energy savings more economically beneficial during wintertime – and the use of surplus electricity for heat pumps with a storage more efficient Supported by many organisations EEB – Green Budget Europe Conference Madrid 26.11.09

Carbon Trading versus Taxation • Setting a minimum price on EUA’s (Emission allowances in the EU Carbon Trading System) will turn the ETS into a tax like system – when allowances are to be auctioned from 2013 This proposal is supported by rather many Danish organizations and Parliamentarians EEB – Green Budget Europe Conference Madrid 26.11.09

Green Tax Reforms have Double Dividend and Create Jobs Source: The COMETR Project – Michael Skov Andersen, 2007 EEB – Green Budget Europe Conference Madrid 26.11.09