Study on Assessing the Environmental Fiscal Reform Potential for the EU28

Study on Assessing the Environmental Fiscal Reform Potential for the EU28 Expert Group on Greening the Semester 15 th January 2016 Tim Elliott (Eunomia) Patrick Ten Brink (IEEP)

Project Tasks Update energy tax good practice Portugal / Luxembourg reports Update tax data (EU wide sources only) Political feasibility review Produce updated EU28 report EFR Information System

Study Outputs EU-28 Report on Potential for EFR Revenue potential figures Assessment of political feasibility EFRIS tool

EU28 Revenue Potential from EFR

EU28 Revenue Potential from EFR 3.5%

EU28 Revenue Potential from EFR

EU28 Environmental Benefits Total environmental benefits for EU28 = ~ EUR 14 Billion

Environmental fiscal reform potential for the EU-28: Summary of political feasibility assessment and questionnaire Patrick ten Brink, Senior Fellow and Head of IEEP Brussels Office With input from Jean-Pierre Schweitzer, Policy Analyst at IEEP. 15 January 2016 Expert Group Greening the European Semester, Brussels www.ieep.eu @IEEP_eu

Introduction to the feasibility study Aim: Assess political feasibility of initiating suggested EFRs in each MS (scale of revenues?, over what timescale?) Take into account specific social, economic and environmental considerations in each MS Identify the key obstacles to EFR in each MS Provide insights for future CSRs Approach Identify key experts/ms representatives Design and disseminate a questionnaire Conduct interviews / assess written responses Develop a summary for each MS and EU-wide synthesis on political feasibility 13

Challenges of assessing political feasibility Assessment of feasibility is inherently difficult and complex Subjective judgement, hence answer will vary depending on who is asked. One person s view cannot represent the position of a member state Nevertheless, has helped to bring out experiences difficult to gather from desk research Longer time frames helped respondents to go beyond current political positions Questionnaire responses compliments with MS comments and the expertise of the project team (including national experts), and the detailed assessment of EFR for each MS 14

Summary of Responses for Political Feasibility of Energy and Transport Tax Reforms 15 Please see Table 1 7 1: Summary of Responses for Political Feasibility of Energy Tax Reforms section 7.5 of the final report, and Table 1 7 2: Summary of Responses for Political Feasibility of Transport Tax Reforms section 7.6 of the final report

Summary of Responses for Political Feasibility of Pollution and Resources Tax Reforms 16 Please see Table 1 7 3: Summary of Responses for Political Feasibility of Pollutions and Resource Tax Reforms section 7.7 of the final report

Summary of Responses for Political Feasibility of Pollution and Resources Tax Reforms 17 Please see Table 1 7 3: Summary of Responses for Political Feasibility of Pollutions and Resource Tax Reforms section 7.7 of the final report

Summary on Responses on the Feasibility of the Reforms Selected taxes Synthesis of responses General Comments Landfill Tax 2017 Could be implemented in the short term Vehicle Taxes 2017 Opportunities to build on a number of MS progress on vehicle taxes Single Use Bag Tax Packaging Tax 2017 This tax is uncontroversial but must be compatible with existing schemes 2017-2022 Has increasing support via resource efficiency and circular economy discourse Air pollution 2017 2022 Could be implemented in the medium term 18 Please see Table 1 7 4: Summary on Responses on the Feasibility of the Reforms section 7.8.4 of the final report

Summary on Responses on the Feasibility of the Reforms Selected taxes Synthesis of responses General Comments Waste Water (BOD) Water Abstraction 2017 difficult to estimate 2017-2022 Water taxation reform continues to face barriers for social and economic reasons. Some MS lag behind with infrastructure. Water taxation reform continues to face barriers for social and economic reasons. Some MS lag behind with infrastructure. Pesticide Tax 2022 A number of MS have agreements not to tax pesticides Freight Tax Passenger Aviation Tax Transport Fuels 2022 Would require EU cooperation to avoid cross border losses 2022 MS could learn from experiences from existing taxes to overcome economic concerns 2022 difficult to estimate Could be supported with a reform of the ETD, helping to address competition and fuel tourism concerns 19 Please see Table 1 7 4: Summary on Responses on the Feasibility of the Reforms section 7.8.4 of the final report

Summary on Responses on the Feasibility of the Reforms Selected taxes Synthesis of responses General Comments Incineration /MBT Tax C&I/heating fuels Electricity Fertilizer Tax Aggregates Tax 2022 2030 Would benefit from cooperation with MS with developed recycling systems 2030 This area continues to be sensitive due to distributional effects 2030 Could be supported with ETD reform, difficult in coal and oil reliant MS Difficult to estimate Difficult to estimate 20 Please see Table 1 7 4: Summary on Responses on the Feasibility of the Reforms section 7.8.4 of the final report

Lessons Learnt A number of windows of opportunity have been identified including in the short term The framing of reforms and clear communication of their intentions and benefits will increase their acceptability Cooperation between Member States could support policy making and help to overcome concerns related to cross border fiscal heterogeneity The European Union can play a role in facilitating EFR Member States can benefit from cooperation, such as for waste management or vehicle taxes. Cooperation can also take place at subnational scales, accounting for regional or federal diversity, and the level at which competence resides for specific taxes Stakeholder engagement can help to overcome social and industry resistance to reform new study will look in depth at this 21

Patrick ten Brink - ptenbrink@ieep.eu Jean-Pierre Schweitzer - jpschweitzer@ieep.eu IEEP is an independent, not for profit institute dedicated to advancing an environmentally sustainable Europe through policy analysis, development and dissemination. In 2016, we celebrate 40 years since IEEP was established! www.ieep.eu @IEEP_eu Follow us!

EU28 Revenue Potential from EFR

EFRIS Tool - Overview Aim is to make data on EFR more easily accessible to stakeholders Extract of data in EU28 report Database tool Step-by-step First step is basic downloadable Excel file Status quo position

EFRIS Tool - Scope Generic / national tax name categorisation Latest / announced tax rates Latest revenue figure Exemptions Taxpayer / collector / beneficiary (where available) Metadate: Data source / html link / date accessed

EFRIS Tool - Outputs Filterable Excel database sheet

EFRIS Tool - Outputs

EFRIS Tool - Outputs Filterable Excel database sheet Static GIS maps (TBC)

EFRIS Tool - Uses Current: Summarization of taxes within a MS Comparison of MS tax levels against other MSs / good practice Future: Tracking of Environmental Tax Reform (ETR) Assessment of historic trends