Minutes of the previous meeting - October 2010
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1 EUROPEAN COMMISSION EUROSTAT Directorate E: Sectoral and regional statistics Unit E7: Environmental accounts and Climate Change Doc. ENV/ERT/TF/02 (2011) Minutes of the previous meeting - October 2010 Task Force Environmentally related transfers (18 October 2011) Eurostat Unit E7 Task Force on Environmentally related transfers of the Working Group on Environmental expenditure statistics Meeting of October 2011 Stockholm
2 Meeting Documents can be soon downloaded from the Environment statistics meetings CIRCA site at Please note that, for environmental reasons, paper copies of meeting documents will not be available in the meeting room. The only exceptions will be documents that are not posted on CIRCA at least one week before the meeting.
3 MINUTES of TF meeting 14 October 2010 on Environmental related transfers (contract: LOT 1: ENVIRONMENTAL ACCOUNTS: DATA COLLECTION, PROCESSING, DISSEMINATION AND METHODOLOGICAL DEVELOPMENTS OF MONETARY MODULES (2009/S ) Participants (ICEDD, DG Taxud and Eurostat): Participants (Countries): Mr. Stephan Moll (EUROSTAT), Mrs. Anda Marina Georgescu (EUROSTAT), Mr. Marco Orsini (ICEDD), Mrs. Pepa Lopez (ICEDD), Mrs. Celine Martin, Mr. Federico Falcitelli (ICEDD), Mr. Marco Fantini (DG TAXUD) Mrs. Isabel Quintela, Mrs. Ana Simão and Mr. BARROS Nuno Sérgio (PT), Mrs. Maja Cederlund and Mrs. Hanna Brolinson (SE), Mrs. Irina Piradashvili (DE), mrs. TUDINI Angelica (it)mr. Luis Martin (ES), Mrs. Donna Livesey (UK),, Mr. Cor Graveland (NL), Mr. Sacha Baud (AT), Mrs. Danica Bizjak and Mrs. Metka Pograjc (SI), Mr. Håkon Torfinn Karlsen (NO), Mr. BALMAND Samuel and Mr. NAUROY Frédéric (FR), mr. FRITZSCHE Jeffrey(Canada) Introduction The TF meeting on Environmental related transfers was held in National Statistical Institute of Portugal, Lisbon, room Salao Nobre, on Thursday 14 October Eurostat welcomed all the participants and thanked Portugal for the organisation of the meeting. It was also recalled that the two main aims of the task force: updating the environmental tax guide (Eurostat, 2001) and developing a methodology for data collection on transfers. The minutes of the previous meeting were adopted after a comment from DG TAXUD on the tax for circulation of vehicles which does not include the annual registration tax of vehicles. The final agenda was adopted (see document ENV/ERT-RUMEA/TF/02 (October 2010)). Environmental related transfers Sweden presented their latest advancements on the development of a data collection framework for environmental related transfers (the presentation will be made available on CIRCA). ICEDD presented the main issues for discussion (see the presentation on CIRCA and the paper Environmentally related transfers ENV/ERT/TF/03 (OCTOBER 2010)). Terminology The issue of the terminology for referring to the group of economic instruments to be included in the methodological framework was first discussed. The proposition was to use the term
4 Environmental related transfers which includes environmental related taxes and environmental related support measures. Following a remark from Sweden, the TF agreed on the fact that the terminology should follow the terminology used by the London Group and in the revision of SEEA, which at the moment seems to be: Environmental related transfers, including: o Environmental related taxes and o Environmental related subsidies and other transfers The transfers to be included in the concept of environmental related subsidies and other transfers The TF discussed all possible issues that can be included in the framework and once again agreed on not using the distinction (terms) on budget / off budget subsidies. There might be many distributive flows as from the National Accounts (NA) which can be included in the definition of environmental related subsidies and other transfers. But in practice the TF agreed to focus for the data collection on a limited number of transfers easily identifiable by using ESA95 categories of transfers below: I. Current transfers (SNA 8.10), and in particular D3- Subsidies (SNA 7.98) which are current payments which general government (or institutions of the EU) make to resident producers, with the objective of influencing their levels of production, their prices or the remuneration of the factors of production. o D31- Subsidies on products o D39- Other subsidies on production D311- Import subsidies D319- Other subsidies on products. D7- Other current transfers (SNA 8.19). These are formed of: o D73- Current transfers within General Government o D74- Current international cooperation (development aid) o D75- Miscellaneous current transfers
5 II. D9 - Capital transfers (SNA 8.10) which are transfers linked to the acquisition (or disposal) of fixed assets and they can be in cash or in kind. In simple words, transfers in kind are related to no counterpart in return of the transfer, while the transfers in cash are coming as following the disposal of an asset. D92 - Investments grants, i.e. grants for financing capital formation (or compensate for damage to capital assets) D99- Other capital transfers (e.g. transfers to cover capital losses or accumulated deficits) Besides this group of items to be collected in priority, the Task Force agreed also on the inclusion of preferential tax rates (tax credits or tax exemptions) in the environmental related subsidies and other transfers to be taken into account for data collection. Two main routes could be followed to find data on these items. Starting from NA the transfers included under the label above indicated could be found and then the environmental motivated part defined. This was indicated by NO and NL. Otherwise as indicated by SE, the subsidies and other transfers listed in the budget could be classified under the label used by the NA (as listed above). FR pointed out that the most part of the transfers environmentally motivated do not fall in the categories above mentioned since they concern preferential tax rates or tax exemptions (please ask FR for the table they prepared to be posted on Circa). What does environmentally motivated mean? Most of the countries may consider all subsidies provided by the Ministries of Environment as environmental subsidies. However, there can be subsidies not environmentally motivated and, on the contrary, there can be environmentally motivated transfers in the Ministry of Economy for example. For this reason and after discussion on the criteria to be followed for the inclusion of subsidies and other transfers in the environmental motivated categories, the TF agreed on: - transfers to be recorded are transfers with an environmental purpose. - these are transfers which are explicitly environmental motivated in the budget of their institution. Although it is not the only source of information one can use, the legislation often makes also clear the motivation of the transfers (for example, to identify environmental transfers, the Netherlands focuses on the motivation described in the legislation). - in addition, particular attention should be paid to the subsidies and other transfers to characteristic activities of the EPEA and resource management account (RMA) which could be not explicitly motivated in the budget or in the legislation and which should be included in the scope of the environmentally motivated subsidies and other support. DG Taxud indicated that for taxes, they abstract completely the motivation as they stick on the definition of environmental taxes provided in the manual which uses a very well
6 recognised physical base (an environmental tax is 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). The revised manual will present examples of boundary cases for which extra information will be needed to identify the motivation or the intention of the transfers. Potentially environmentally damaging subsidies (PED) No agreement could be found on the criteria to identify PED. In principle all the subsidies and other support could be PED. The methodology for the calculation of an indicator comparing emission intensities (as explained by Sweden in the TF of February 2010) incurred in some criticisms related to the way of defining which are the PED subsidies with regards to their emission intensities. Also the use of the tax base list could engender problems as it is not clear how subsidies and other support to the products included in the tax base list could be effectively defined as PED. Discussions ended up with the idea that neither the motive, nor technical nature can be used to identify this kind of transfers. User needs was brought up as issue. Eurostat recalled the 2020 Strategy and explained that this is needed by policy makers especially in view of phasing out env damaging subsidies. The Task Force questioned the fact that it is possible to establish a clear and easy to use methodology for the collection of data on PED. Eurostat should discuss the need of the Commission in order to refine their demand of statistics on harmful subsidies. Conclusion by the TF: Criteria to identify PED have to be established (work to be done for the next TF), but stick only to policy makers requests when looking for this kind of transfers and reflect again on the topic. Dimensions of data on environmental related subsidies and other transfers The dimensions which are relevant for data on environmentally related transfers have been identified by the TF. These are: country, time and unit as basic dimensions, followed by type of subsidy and other transfers (following the ESA95 details + preferential tax treatments), institutional sector giving the transfer, institutional sector receiving the transfer (breakdown by industry if possible), environmental domain. With regards to the institutional sector and industry dimensions, Portugal stressed the fact that when starting from NA data it could be difficult to have a breakdown by industry for most of the items to be collected. With regards to environmental domains, although it is not a priority, the TF agreed that at least the subsidies and other support related to climate change should be accounted for separately. In principle the CEPA (and CRUMA) classifications should be used whenever possible. Homework
7 The TF agreed on the proposal of testing the collection of data on environmental motivated subsidies and other transfers through a homework which should contain: Some guidelines on the subsidies and other transfers to be collected A table for collecting the data Countries will be asked first of all to try to fill in the tables for the items which have been chosen as a priority and to test if there are other relevant items which fall outside the range of D codes above specified (but which can be in any case classified according to NA categories). It was also agreed that Eurostat will undertake an analysis of the European Funds. The homework will be sent to countries by the end of the year and countries will be asked to reply by mid Environmental taxes ICEDD presented the main issues relevant for the revision of the Environmental Taxes manual (Eurostat, 2001). These presentations as well as a draft manual which includes the modifications included so far are both posted on Circa. Portugal includes VAT of products from the tax base list as a tax. It was discussed and agreed again that VAT should remain outside the scope of environmental taxes. The only exception is VAT on the incremental part, i.e. VAT calculated on the environmental tax which is applied to the product. DG Taxud proposed to explain in more detail the definition of environmental taxes. For example, if taxes on resources are applied on profit and not on the amount of the resources extracted, these taxes will not be recorded as environmental (for example, the manual could more explicitly explain what a proxy of a physical unit is, because in this case profit could be considered as the proxy of the amount of resources extracted). The TF considered it is a very good idea to include in the environmental taxes questionnaire memo items for charges and fees. The revised Manual will include examples on boundary/borderline cases for taxes and fees in order to help compilers to distinguish between taxes and fees. DG TAXUD for example insisted on the case of congestion charges which should be considered as environmental taxes. PT stressed that these are recorded by NA as fees. Thus these should be accounted for as memo items for analysis purposes. TF acknowledged the importance of this type of transfers and decided to include fees, charges and possibly rent in the framework, but keep them always separate from what are to be labelled env taxes. Eurostat supported the idea, as the inclusion of those as memory items will avoid the issue of changing the definition (already agreed to remain as such by the LG+ protecting the annex II of the Legal Base of Env Acc).
8 DG TAXUD proposed to slightly modify the terminology for clarification purposes, as follows: Energy taxes: to become energy taxes (including fuel) Transport taxes: to become transport taxes (excluding fuel) TF agreed with the proposal as it is just a matter of clarification, not a matter of changing. Attention should be paid on the explanations in the revised handbook, not to affect the current annex II of the LB of Env Acc.
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