Environmental taxes

Presented by Maja Cederlund,

Statistics Sweden

However….

Written by Viveka Palm and Nancy Steinbach, Statistics Sweden

together with Ute Roewer, Eurostat.

Structure today

- Why important?

- Environmental taxes in SEEA rev. - Purpose!

- Background/information

- Proposals (5 areas) including previous background

- Summary of proposals!

Why is this so important?

-Very common & efficient policy tool-As opposed to subsidies (later) we think we talk about same thing

… not always the case!

THEREFORE:

definitions very important!

Internationally harmonised!

Environmental taxes in SEEA rev

● Why having this presentation?

- Agreed to discuss further developments of SEEA

- Aim to raise the statistics to an agreed international standard

● Current status

-Chapter 5 – included in EPEA framework

-Chapter 6 – environmental taxes, broadly defined

● This paper important suggestions in order to propose a scope for revision of SEEA.

Aim also to reduce current confusion.

EU outlook

Distributed in four categories

Proposals A-C – related to definition

● Energy taxes

SO2 taxes discussed in proposal D

● Pollution taxes

SO2 taxes discussed in proposal D

● Resource taxes

Resource rent taxes discussed in proposal E

● Transport taxes

Proposal F – related to EPAE

2004 2005 2006* 2007*Energy tax 63 946 65 900 66 893 67 233>Energy tax (total) 34 948 37 882 38 303 38 288

of which: fuel tax 17 880 19 661 19 277 19 456electricity tax 17 069 18 221 19 026 18 832

>Other product taxes on electricity 2 486 2 483 3 846 4 219of which: hyrdroelectic power tax - - - -nuclear power tax 1 1 863 1 794 3 198 3 238fees/tax for reduction and storage 645 689 648 981

>Carbon dioxide tax 26 490 25 535 24 744 24 726Tax on certain substances 1 416 1 309 1 187 1 308>Sulphur tax 131 75 80 56>Tax on domestic air transport - - - ->Tax on insecticides 61 77 81 81>Tax on commercial fertilizers 303 329 295 306>Tax on waste 729 735 646 787>Environmental protection fee2 108 - - ->Fee to the battery fund 84 93 85 78Tax on transportation 8 338 10 518 11 079 10 657>Vehicle tax 8 062 10 247 10 519 10 298>Sales tax on motor vehicles - - - ->Congestion tax - - 290 204>Kilometre tax - - - ->Fee to the vehicle scrap fund 276 271 270 155Tax on natural resources 202 200 254 261>Natural gravel tax 202 200 254 261

Per cent of GDP in Sweden 2,8% 2,8% 2,7%Per cent of total taxes in Sweden 3 8,7% 8,5% 8,3%Env. taxes in EU as per cent of total GDP in EUTotal 73 902 77 927 79 413 79 459

Using Sweden as an example:

Definition tax

● Satellite account to SNA – same tax definition, no changes:Taxes on products: §7.48 Taxes are compulsory, unrequited payments, in cash or in kind, made by institutional units to government units.  They are described as unrequited because the government provides nothing in return to the individual unit making the payment, although governments may use the funds raised in taxes to provide goods or services to other units, either individually or collectively, or to the community as a whole.

One important issue though:

● Fee vs. Tax, difference not always clear!

- Describe borderline cases more clear

- May be cases where “we” can contribute

Proposal A1

● It is suggested that the SEEA rev. will further develop the paragraph clarifying the difference between a tax and a fee in accordance with the final draft chapter 7 of the SNA rev both in general terms and for more environmentally related items.

Clarify differences, examples!

How to define an environmental tax

● OECD/EC definition of Environmental tax, since 2001 ”A tax whose tax base is a physical unit (or a proxy of it) of

something that has a proven, specific negative impact on the environment.”

Motive not of concern

Used in SEEA today

● OECD/EEA database definition, came later

- slightly modified

”This database defines environmentally related taxes as any compulsory, unrequited payment to general government levied on tax-bases deemed to be of particular environmental relevance. Taxes are unrequited in the sense that benefits provided by government to taxpayers are not normally in proportion to their payments.”

The effect - more resource taxes

“Softer” approach

Not always complete coverage

Tax bases

:

OECD/EEA database on instruments used for environmental policy and natural resources

management

www2.oecd.org/ecoinst/queries/index.htm

Proposal B1

● It is suggested to use the definition of ”A tax whose tax base is a physical unit (or a proxy of it) of something that has a proven, specific negative impact on the environment.” In accordance with Eurostat 2001 and SEEA 2003.

OECD/EC definition!

Value added tax (VAT)

● VAT excluded from environmental taxes today, why?

- Deductible for producers, not households, no influence on the relative prices as other taxes on tax bases do.

● However, can be differentiated based on environmental reasons, so may be interesting to follow!

* Example Sweden: discussions about reducing VAT for ecological

food

Proposal C1 & C2

● It is proposed to exclude calculations of VAT in the concept of environmental taxes.

● It is proposed that a discussion in the SEEA could highlight the subsidy aspect of VAT.

Tax on sulphur

● Studies shown difficulties separating sulphur tax from carbon dioxide tax

● Also the sulphur tax important from an energy perspective

● Today classified as Pollution tax

Proposal D1 & D2

●It is proposed to include sulphur taxes as an energy tax instead of a tax on pollution.

● It is proposed to, as for carbon dioxide taxes, keep the tax as a separate item under the category energy

taxes for facilitated analytical benefits.

easy changes to make

2004 2005 2006* 2007*Energy tax 63 946 65 900 66 893 67 233>Energy tax (total) 34 948 37 882 38 303 38 288

of which: fuel tax 17 880 19 661 19 277 19 456electricity tax 17 069 18 221 19 026 18 832

>Other product taxes on electricity 2 486 2 483 3 846 4 219of which: hyrdroelectic power tax - - - -nuclear power tax 1 1 863 1 794 3 198 3 238fees/tax for reduction and storage 645 689 648 981

>Carbon dioxide tax 26 490 25 535 24 744 24 726Tax on certain substances 1 416 1 309 1 187 1 308>Sulphur tax 131 75 80 56>Tax on domestic air transport - - - ->Tax on insecticides 61 77 81 81>Tax on commercial fertilizers 303 329 295 306>Tax on waste 729 735 646 787>Environmental protection fee2 108 - - ->Fee to the battery fund 84 93 85 78Tax on transportation 8 338 10 518 11 079 10 657>Vehicle tax 8 062 10 247 10 519 10 298>Sales tax on motor vehicles - - - ->Congestion tax - - 290 204>Kilometre tax - - - ->Fee to the vehicle scrap fund 276 271 270 155Tax on natural resources 202 200 254 261>Natural gravel tax 202 200 254 261

Per cent of GDP in Sweden 2,8% 2,8% 2,7%Per cent of total taxes in Sweden 3 8,7% 8,5% 8,3%Env. taxes in EU as per cent of total GDP in EUTotal 73 902 77 927 79 413 79 459

Taxes on oil and gas extraction

● In 2001, tax on oil and gas where excluded – why?

- Do not influence prices, as other environmental taxes do

- Purpose to capture resource rent

- Tax base not physical unit but a result of output value

● Treated as an environmentally related tax in the OECD/EEA database

Proposal E1 & E2 (in short)

● It is suggested to exclude taxes on oil and gas extraction if it is considered to be a resource rent. (…..) If there is a country specific requirement to highlight resource rents it should be kept separate to the sum of environmental taxes.

● The SEEA rev. should clarify better what type of resource taxes can be included. It is important to describe that each tax needs to be evaluated on its own merits. (…..)

Taxes in the EPEA framework

● EPA framework captures more than “Environmental tax” 1 Other taxes on production, levied on the

production of EP services

2 Taxes on products, levied on the output

of EP services

3 Specific taxes, i.e. earmarked for financing EPEA

the prod. of EP services

4 Other environment-related taxes, i.e. on a physical Env tax

env tax base, but not earmarked for EP activities

● Important that different approaches are kept close to each other

Proposal F 1

● It is proposed that the revised SEEA includes in the same chapter the discussions on environmental taxes and EPEA, for example some text / guidance is needed to work out how both concepts can be introduced in close connection with each other in a consistent way.

Proposals in short● A1 Further develop the paragraph clarifying the difference

between a tax and a fee

● B1 Use the definition from OECD/EC from 2001

● C1 Exclude calculations on VAT

● C2 Highlight the subsidy aspect of VAT in discussion

● D1 Include sulphur tax as Energy tax (now Pollution)

● D2 Keep sulphur tax separate

● E1 Exclude taxes on oil and gas extraction if considered to be a resource rent. If include, keep separate

● E2 Clarify better which resource taxes to be included

● F1 Include discussion of environmental taxes in same chapter as EPEA; with guidance

Definition E1 and E2● E1. It is suggested to exclude taxes on oil and gas extraction if

it is considered to be a resource rent. As the tax base is not a physical unit but a result of output value the payment in itself does not influence prices. The payment can therefore not be considered an environmental tax. If there is a country specific requirement to highlight resource rents it should be kept separate to the sum of environmental taxes.

● E2. The SEEA rev. should clarify better what type of resource taxes can be included. It is important to describe that each tax needs to be evaluated on its own merits. One example is the Aggregates levy in the UK. This is a resource tax on the commercial exploitation of rock, sand and gravel. It is charged at the rate of £1.60 per tonne and applies to anyone who is responsible for commercially exploiting aggregates in the UK, such as quarrying operators, mobile crusher operators and operators of dredgers. There is a similar tax in Sweden called Natural gravel tax that is applied at a rate of 13 SEK per tonne gravel and has been evaluated to belong to the area of natural resource taxes.