EU Urges Tax Incentives to Cut Carbon Emissions
Date: 29-Mar-07
Country: BELGIUM
Author: Huw Jones
The European Commission has been debating how taxes, tradable emissions rights and other market-based instruments could be used to encourage people to pollute less and conserve more.
Taxation remains largely an issue for national governments and EU-level tax decisions need to be approved by all the bloc's 27 members.
But Brussels is seeking to promote best practice in using taxes to cut pollution, whether by choosing a more energy efficient fridge or swapping the gas guzzler for a smaller car.
Some states have already introduced green taxes.
Ireland has a 15 euro-cent tax on plastic bags to encourage re-use, Denmark taxes packaging to cut down on throwaway tableware, and London and Stockholm have introduced a charge to cut road congestion.
Several states have taxes or charges on extracting groundwater or water consumption, while hunting and fishing permit fees can limit the impact on biodiversity.
"There is considerable scope for learning from each other," EU Environment Commissioner Stavros Dimas told reporters.
Proposals would be made to EU states next year for introduction around 2010, Commission officials said.
TAX AS AN INCENTIVE
The aim is to shift the focus to taxing consumption as taxing capital and labour becomes less viable due to an ageing population and a more globalised economy.
"Taxation should in the first place discourage what is undesirable, rewarding at the same time all sorts of positive behaviour, be it energy savings or environment-friendly activities," EU Tax Commissioner Laszlo Kovacs said.
Tax revenues can then be used to boost innovation and jobs, Kovacs told a news conference.
Car allowances for employees was one practice that was not environmentally friendly, a Commission official said.
The Commission's discussion paper on green taxes was published less than three weeks after EU leaders agreed on targets to slash greenhouse gas emissions, switch to renewable fuels and boost energy efficiency.
The EU executive may revise minimum duties on fuel by splitting them into two elements, with all fuels taxed in an uniform way according to energy content, but differently according to greenhouse gas emissions created.
Transport was responsible for just over a fifth of carbon dioxide emissions in the EU in 2004 and the Commission has already put forward two proposals to tackle this.
The Commission has proposed that a portion of a car's taxes reflect how much the engine pollutes.
It has also proposed raising the EU's minimum duty on commercial diesel fuel, partly to stop trucks from adding to pollution by taking detours to a neighbouring country where fuel is cheaper.
The Commission is separately reviewing its emissions trading scheme and may include road transport and shipping, Dimas said. A proposal to add airlines to the scheme was tabled last year.