EU to use green tax in fight against climate change
Seeking new ways to reach its ambitious environment goals, the European Commission is set to make taxation one of its principal tools in cutting greenhouse gas emissions by 20 percent by 2020.
Commissioners Stavros Dimas (environment) and Laszlo Kovacs (taxation) have launched a public debate on how so-called market-based instruments such as emissions trading, environmental taxes and targeted subsidies could be used to discourage pollution.
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"Our goal is to promote the use of market-based instruments whenever they are appropriate," commissioner Dimas said, adding "this cost-effective approach has proved its value, but is still underutilized."
The major change lies with taxes on energy products, as they currently do not reflect their impact on the environment.
Brussels is suggesting splitting the EU-wide minimum excise duties into energy and environmental elements, which would be mirrored in member states, forcing them to introduce an energy tax and an environmental tax.
According to Mr Kovacs, such a tax differentiation would indirectly favour cleaner energy sources, especially renewable energy and it would push producers and consumers away from non-environmentally friendly goods.
In addition, the commission's paper - made public on Wednesday (28 March) - has underlined that by adopting differentiated tax rates member states can also promote products containing less polluting substances.
Taking Ireland as an example, Mr Dimas praised the country for introducing a plastic bag levy in 2002, as some 1.2 billion plastic shopping bags were provided free of charge each year. The levy - with revenues assigned to environmental purposes - has led to an over 90 percent reduction in their use, with consumers preferring to bring their own reusable shopping bags with them.
A similar compliment was paid to the Danish government, which decided to reflect the environmental impact of different packaging materials in the tax rate.
"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," Mr Kovacs said.
He added that environmental taxes can generate revenues, which can subsequently be put back into the economy or used to cut other taxes, such as on labour.
The public debate is part of efforts to overhaul the energy taxation directive by the end of this year - consultations will be wrapped up by July.