eea briefing note for etr workshop_madrid

7/27/2019 EEA Briefing Note for ETR Workshop_Madrid

1/16

EEA

EEAStaffPositionNote(September2012)

SPN12/01

ENVIRONMENTALFISCALREFORM

ILLUSTRATIVEPOTENTIALINSPAIN

PreparedforaseminaronEnvironmentalFiscalReform

Madrid,September13th

2012

hostedby

Ministerio

de

Agricultura,

Alimentacin

yMedio

Ambiente

By

StefanSpeckandMikaelSkouAndersen

European Environment Agency


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Environmentalfiscalreform:illustrativepotentialinSpain

Summary

Spainfacesafiscalchallengetheaddressingofwhichrequiresacombinationofcutsingovernment

expenditureandincreasesintaxation.Spainwithitscurrentleveloftaxation(includingsocial

securitycontributions),measuredasashareofGDP,isamongthelowestintheEU,i.e.itranks

accordingtoEurostat18th.Thetaxsystemreliesheavilyondirecttaxesandsocialsecurity

contributionsandincontrastrevenuefromindirecttaxesbeingthesecondlowestintheEU.

RecentlySpainadoptedambitiousreformprogrammesanditplanstoachieveageneralgovernment

deficitof5.3%ofGDPin2012.Followingthefiscalcrisisthegrossdebtincreasedfromanaverageof

39.8%ofGDP(20052008)to68.5%in2011anditisassumedthatitwillfurtherincreaseto87%by

2013(EC,

2012).

Toaddressthisfinancialchallenge,thegovernmentintroducedseveralbudgetarymeasuresatthe

revenueaswellastheexpendituresidein2011and2012.Thestabilityprogrammeforeseesan

increaseinindirecttaxesin2013.Therearemanyinterestingideasastohowthebudgetarygapcan

bebridged,butsofarnoanalysisastohowabroadeningofthetaxbasewithenvironmentaltaxes,

leviesandchargesmightcontribute.

Thefocusofthepaperistoprovideashortoverviewofthecurrentsituationoftheuseof

environmentallyrelatedtaxesinSpainaswellastohighlightthepotentialofenvironmentaltaxesin

termsof

their

revenue

raising

potential

based

on

established

practice

in

EU

Member

States.

Thepaperalsodebatetheillustrativepotentialforasubstantialenvironmentaltax/fiscalreform,

i.e.theshiftingofthetaxburdenfromlabourtowardsconsumptionandenvironmentaltaxesas

statedinthe2012countryspecificrecommendationforSpainbytheCounciloftheEuropean

Union1:Introduceataxationsystemconsistentwiththefiscalconsolidationeffortsandmore

supportiveofgrowth,includingashiftawayfromlabourtowardsconsumptionandenvironmental

taxation.

The

knowledge

base

for

Environmental

Fiscal

Reform

Climatechange,biodiversityloss,ecosystemdegradation,thehumanhealthimpactsofchemical

pollution,growingmaterialresourcescarcity,concernsaboutfood,energyandwatersecurity,as

wellasnationalbudgetdeficitsandanincreasinglyageingpopulationarecurrentchallengesfacing

theEuropeanUnion.Atthesametime,thereisincreasedunderstandingofthelinkagesbetween

manyenvironmental,economicandsocialproblems,pointingtothecosteffectivenessofintegrated

packagesofpolicymeasures(EEA,2010).

1

See: page 12 of the Council Recommendation on the National Reform Programme 2012 of Spain anddelivering a Council opinion on the Stability Programme for Spain, 2012-2015, Council of the European Union,

Brussels, 6 July 2012; http://register.consilium.europa.eu/pdf/en/12/st11/st11273.en12.pdf


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Apolicythatshiftspartofthetaxbasetoenvironmentallydamagingconsumptionactivitiescanbea

vitalpartofanoverallpolicypackagethataimstotacklethesemultiplechallenges,asrecommended

in the Europe 2020 strategy and in particular spelled out in the 2012 Countryspecific

RecommendationsforcountriesincludingAustria,Belgium,France,ItalyandSpain2.

Suchashiftinpolicymeasuresthatshiftrevenueraisinginstrumentsfromlabourandcapitalto

resourceuseandpollutiontaxesisoftendefinedasanEnvironmentalTaxorFiscalReform(ETR/

EFR).ExperiencesgainedinseveralEUmemberstates,suchasSweden,Denmark,Finland,

Netherlands,Germany,UK,EstoniaandtheCzechRepublic,whichhaveimplementedETRinthe

1990sandearly2000s,showbroadlypositiveresults.

TheimplementedEFRshavebeenregularlydesignedaccordingtotherevenueneutralityprinciple

(i.e.increasingrevenuesfromenvironmentaltaxesinordertoreducerevenuesfromlabourand

capitaltaxes),orpartiallyso,thusrelievingthepressureonlabourasataxbase.

Underthecurrentcircumstancesoffiscalconsolidationneeds,arenunciationoftherevenue

neutralityprincipleseemstobeanoptiontobeconsidered.Thisaspectisexplicitlyhighlightedina

recentreportpublishedbytheInternationalMonetaryFund(IMF):

Thesepricingpolicies[carbontaxesortheircapandtradeequivalentswithallowanceauctions]can

alsobecomealargenewsourceofgovernmentrevenue,whichcouldmakeasignificantcontribution

tomeetingfiscalconsolidationchallengesand,moregenerally,tobuildingmoreefficientandfairer

taxsystem... Revenuesfromthesefiscalinstrumentscancontributesignificantlytofiscal

consolidationneedsifcountriesdonotimplementsuchpolicies,theywillneedtorelymoreheavily

onother

deficit

reduction

measures

(IMF,

2012

p.v

and

p.ix).

Between1996and2005theEuropeanEnvironmentAgency(EEA)publishedfourreports(EEA,1996,

2000,2005and2006)onmarketbasedinstrumentsandthepotentialforenvironmentaltaxreform

intheEU.Morerecentlyithascommissionedresearchintotheimpactsofenvironmentaltaxreform

onthepoliticalfeasibilityofsubstantialETR,onecoinnovationandonthedistributionalimplications

(Bassietal.,2009,EEA,2011aand2011b).

OtherbodiessuchastheOECD(OECD,2001,2006and2010),plusawiderangeofEUandnational

researchactivities(forexample,AndersenandEkins,2009,UKGreenFiscalCommission,2010,and

EkinsandSpeck,2011)havefocusedsuccessfullyonansweringquestionsaroundthepurpose,

validityandeffectivenessofmanyEFRinstruments.

StudiesbyLopezGuzman(2004),Gagoetal.(2006),Labandeiraetal.(2007), Labandeira(2011),

GagoandLabandeiro(2012),Poncela,deMiguelandManzano(2011)andMarkandya etal.(2012)

haveassessedtheenvironmentaltaxationsysteminSpainandaddressedtheirpotential.Whilstthis

considerableresearchintothemultiplebenefitsofETR/EFRhashelpedtostimulatethe

implementationofETR/EFRsinsomeEUandothercountries,itisnowrecognisedthatthemain

barrierstoETR/EFRarelargelypoliticalandinstitutional,requiringcommonunderstandingbetween

2See http://ec.europa.eu/europe2020/making-it-happen/country-specific-recommendations/index_en.htm


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4

manystakeholdersandappreciationofthedifferentnationalcontextswithinwhichETR/EFRcan

work.

Theeconomyandthetaxsystem(inparticulartheenvironmentaltaxsystem)inSpain

Between1995and2008theGDPgrowthrateexceeded3%andsince2008Spainhasbeen

seriouslyaffectedbythefinancialcrisiswithnegativeGDPgrowthratesandanincreasein

unemploymentforecastedtobeabout25%in2013.

Duringtheyearsofthefinancialcrisisthedeclineingovernmentrevenueswasaccompanied

byanincreaseinnetborrowingleadingtoafurtherriseingovernmentdebt.Until2008the

Spanishgovernmentreducedthegrossdebttoabout39.8%ofGDPanditisforecastedthat

thegrossdebtwillriseto87%in2013(EC,2012).

Theoveralltax(includingsocialsecuritycontribution(SSC))toGDPratioofSpainisbelowEU

average(ranked18th

inEU27)in20103.Theshareofrevenuesfromlabourtaxesandsocial

securitycontributionisclosetoEUaverage.However,theshareofSSCpaidbyemployersis

relativelyhigh(ranked6th

ascomparedtorank24th

forSSCpaidbyemployees)(Eurostat,

2012).

TheshareofindirecttaxtoGDPisoneofthelowestintheEU(rank26th)andthesharesof

VATaswellasenvironmentaltaxestoGDParethelowestintheEU,i.e.ranked27th).When

expressedasashareoftotaltaxationthenSpainranked25th

incaseofenvironmentaltaxes

in2010.

About

10

years

ago

the

share

of

environmental

taxes

to

GDP

amounted

to

2.3%

and

declinedto1.6%in2010.TheEUaverageisabout2.4%withDenmarkandtheNetherlands

havingahighestshareof4%.ThefallintheshareofenvironmentaltaxrevenuestoGDPdid

notonlyoccurinSpainbutmoreorlessinmanyEUmemberstatesasthissharedropped

from2.8%in1999to2.4%in2010attheEU27level.

ThereareseveralenvironmentaltaxesinplaceinSpain.Spainranks26th

inEU27intermsof

revenuesgeneratedfromenergytaxesand18th

whenconsideringvehicletaxationasashare

ofGDPin2010.Theshareofpollutionandresourcetaxationisalsooneofthelowestinthe

EU.

TheSpanishenergytaxationschemeheavilyreliesontaxesleviedontransportfuels.

However,petrolanddieseltaxesareratherlowwhencomparedwiththeneighbouring

countries:thetaxratesare43%(29%)higherincaseofpetrol(diesel)inFranceandthetax

differenceislowerwhencomparedwithPortugal(petrol38%anddiesel11%)4.Naturalgas

usedforheatinginzeroratedandtheproductionandimportofelectricityistaxedwithan

advaloremtax,i.e.thetaxrateis5.113%.

3

Eurostat, 2012, Taxation trends in the European Union Data for the EU Member States, Iceland and Norway,2012 edition, Luxembourg, Publication Office of the European Union.4Calculation is based on data presented in DG TAXUD Excise Duty Tables as of July 2012


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5

Thebaseforvehicletaxationforprivatevehiclesdiffersbetweentheacquisitionofavehicle

andtheannualvehicletax.TheformertaxschemeisbasedonvehiclesCO2emissionsandin

thecaseofthelattertherateissetbasedontheenginerating. Thetaxratesaresetatthe

nationallevelbutinadditiontheautonomousregionalGovernmentsareallowedtolevy

specialtaxes.Thetotalrevenuefromvehicletaxationseemstobenotoverlyhighasthe

shareofvehicletaxationrevenuestoGDPishigherincountries,suchasGermanyandthe

UK,whichonlylevyanannualvehicletax.

TheSpanishfiscalsystemallowsautonomousregions(calledAutonomousCommunities)to

regulatetheirowntaxeswiththelimitationthattheycannotsettaxeswhentheyalready

beingintroducedbytheStateGovernment.14outofthe17autonomousregionsaremaking

useofthisregulationandintroducedenvironmentaltaxes(seeAnnexforanoverview).

Severalautonomousregionsintroducedresourceandpollutiontaxesinareaslikewater

management,water

pollution,

waste

and

air

pollution.

NaturalgaspricestoconsumersaregenerallylowcomparedwithotherEUmemberstates.

Thisisincontrasttoelectricitypricestoconsumerswhichwerethe6th

highestfordomestic

consumes(households)and10th

highestforindustrialconsumersinthesecondhalfof

20115.AspecificfeatureintheSpanishretailelectricitymarketisthesocalledtariffdeficit

whicharoseastheresultoftariffregulationsbytheSpanishGovernment.Thetariffdeficit

amountstoabout24billion(morethan2%ofGDP)ofwhichtwothirdsareguaranteedby

theGovernment.Electricitytariffscomprisetwoelements:(1)agenerationtariffthatisset

bymarketprices;and(2)anaccesstariffthatisregulatedsetbythegovernmenttocover

thefixed

costs

of

the

system,

i.e.

the

costs

of

operating

transmission

and

distribution

networksaswellasothercostssuchasFeedintariffs,capacitypaymentsandpremiums

paidtocogenerationplant.Thereasonforthetariffdeficitisthattheregulatedtariffsdonot

alwayscoverthecosts(EC,2012). InMarch2012,theGovernmentadopteddifferentpolicy

measuresaimingtoreducethetariffdeficitincludinganincreaseintheregulatedtariffofup

to7%.

Thelatestdevelopmentinthetaxationschemeofrenewablesisalsoimportanttohighlight.

TheSpanishfeedintariff(FiT)schemeisinplaceforseveralyearsaimingtoaccelerate

investments

in

renewable

energy

technologies.

The

basic

structure

of

the

scheme

was

establishedin1998andsincethenmodified.Atthebeginningof2012theSpanish

governmenttemporarilysuspendedtheFiTapplicationsforrenewableenergyprojects

startingoperationsafterJanuary2013.However,severalautonomousregionsintroduced

newtaxesaffectingelectricitygeneration,includingrenewableelectricitygeneration

technologies.TheRegionofCastillalaManchaintroducedin2011anewtaxleviedonwind

turbines.Theratedependsonthenumberofturbinesofawindfarmandissetbetween

498perturbineforawindfarmwithturbinesbetween3and7and1233perturbinefora

windfarmwithmorethan15windturbines.Windfarmswithlessthan3turbinesare

5Source: Eurostat data nrg_pc_204: domestic consumers with a consumption between 2 500 kWh and 5 000

kWh and data nrg_pc_205: industrial consumers with a consumption between 500 MWh and 2 000 MWh


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6

exemptfromthetax.Inaddition,thisregionincreasedtherateofnuclearproductionof

technologyfrom1.5perMWhto2.1in2011.TheRegionofGaliciaintroducedataxon

transmissionanddistributionactivitiesin2011.Thetaxratesisbasedonthelengthofeach

network.ItisalsoreportedthattheRegionofCastillayLeonplannedtointroducenewtaxes

onelectricitysectorin2012includingataxonhydropowerplantswhichshouldbebasedon

thecapacityofthereservoiraswellasontheinstalledpower.Anothertaxisplannedto

coverthenetworkandinadditionataxonwindturbines.Thetaxbaseofthelatteroneis

eachwindturbineandtheratesaresetdependingonthecapacityreaching12000fora2

MWturbine.

Spainfaceslargechallengesinthefieldsofwaterandwastemanagementandairpollution.

Forexample,Spainisoneofthe11EUMemberStatesthatexceededtheinternational

emissionsceilingin2010,andamongthetwoMemberStates(SpainandDenmark)that

exceededthreeceilings(fornitrogenoxides(NOx),nonmethanevolatileorganiccompounds

(NMVOCs)and

ammonia

(NH3))

6

.Furthermore,

the

EC

reports

that

water

tariffs

in

Spain

are

amongstthelowestintheEU.Inparticular,certainregionalwaterpricingpoliciesgive

farmerslittleincentivetoreducewateruseforirrigation.7

Spainprovidesfinancialsupporttotheenergysector.Thesesupportschemesaregivento

hardcoalminingaswellasinformoffueltaxexemptionsandreductions.Thetotalsumof

thesefinancialsupportschemeswereplannedtoamounttoabout2,655millionin2010

(OECD,2011).Thissubsidyfigureaccountsforabout19%oftotalenergytaxrevenuesin

2010.

TheillustrativepotentialofenvironmentaltaxesinSpain optionsforreformbasedonEU

memberstatesestablishedpractice

Spainismakinguseofenvironmentaltaxesbuttherevenuesgeneratedfromthemarelowin

comparisontotheEU27average.ManySpanishtaxratesareratherlowanditcouldthereforebe

anticipatedthattheycouldbeincreasedtherebyimprovingtheenvironmentaleffectivenessaswell

asraisingtherevenues.ThisaspectisaddressedbytheECinthe2012ECcountryrecommendation

forSpainaspartoftheEurope2020strategy:

Spainthushassomeroomtoimprovetheefficiencyofthetaxsystembyshiftingrevenue

towardstheleastdistortingtaxessuchasthoseonconsumption(inparticularVAT)and

environmentaltaxes,whichwouldbeconsistentwithfiscalconsolidationefforts8.

Growthfriendlyfiscalconsolidationwouldincludeimprovingtheefficiencyofthetaxsystem

byshiftingthetaxburdenfromlabourtowardsconsumptionandenvironmentaltaxes,

broadeningtaxbasesandrationalisingsubsidies9.

6See http://www.eea.europa.eu/highlights/eleven-member-states-exceed-

air?utm_source=EEASubscriptions&utm_medium=RSSFeeds&utm_campaign=Generic7http://ec.europa.eu/europe2020/pdf/nd/swd2012_spain_en.pdf8Reference:http://ec.europa.eu/europe2020/pdf/nd/swd2012_spain_en.pdf(page14)


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TheGovernmentofSpainintroduceddifferentconsolidationmeasuresduringthelastyears(EC,

2012).Thefiscalconsolidationprocessaddressestherevenueaswellastheexpendituresideofthe

nationalbudget.Themainemphasisofthisprocesswasdirectedtothereductionofexpendituresas

thiswasoftenseenastobemoresustainableascomparedtorevenuedrivenpolicies.However,

duringrecentyearstheinsightsofhavingamorebalancedapproachbetweenausterityandtax

raisingpolicieshavebeentakenoverashighlightedbyscholarsfromtheIMF:Unlikeprevious

researchonfiscalconsolidation,ourfindingsshowthatraisingtaxrevenueiskeytosuccessfuldebt

reductionincountrieswithlargefiscaladjustmentneeds..Measurestoincreasetaxationshould,

however,bedesignedinawaythatdoesnotharmefficiencyandminimizesdistortion,particularly

wheretaxesasapercentageofGDParealreadyhigh.Simplifyingthetaxsystembyreducing

excessivetaxratesandbroadeningthetaxbasecouldhelpenhancerevenuecollectionwhileshifting

theburdenoftaxesawayfromproductiveinputs.Forexample,financialsectorandcarbontaxation

mayhelpthebudgetwhileatthesametimeaddressingefficiencyconcerns(IMF,2012)10.

ConcretestepshavebeenimplementedinEuropeancountriesinovercomingthefiscaldeficitsby

raisingadditionaltaxrevenuesalsofromenvironmentaltaxes.Forexample,Greeceincreased

drasticallythetaxratesleviedonunleadedpetrolby87%anddieselby36%betweenJanuary2009

andMay2010andItalydidthesameasitincreasedthetaxratesleviedontransportfuelsby27%

(unleadedpetrol)and43%(diesel)betweenApril2011andJune2012.AspartoftheIrishfiscal

consolidationstrategyacarbontaxwasintroducedattheendof2009.Initiallythetaxratewasset

at15pertonneofCO2butadoublingofthetaxrateto30until2014wasannouncedintheIrish

NationalRecoveryPlan20112014.

Severalpolicies

are

already

in

place

or

have

been

announced

by

the

Spanish

Government

during

recentmonths. TheEUEmissionTradingSystem(EUETS)isacornerstoneoftheEUsclimatepolicy

andtheauctioningofcarbonallowanceswillbetherulestartingwiththethirdtradingperiodin

2013.SpainlikeallotherEUmemberstatesarerequiredtointroducethemandatoryauctioning

althoughithastobementionedthatauctioning,i.e.earlyauctionsalreadystartedin2012inSpain

intheformofearlyauctions,i.e.theauctioningof20132020allowance beforethethirdtrading

periodstarts.TheyincludetheauctioningofETSallowances,whichwillstartfrom2012.Other

policiesindicatedareincreasesinenergytaxes11

andalsoplanstoreviseelectricitytariffsby7%12

andtotacklethetariffdeficit13

aswellastosuspendandreformthefeedintariffsystemfor

renewables.

9Reference:http://ec.europa.eu/europe2020/pdf/nd/swd2012_spain_en.pdf(page6)

10See also the report Restoring Fiscal Sustainability in Spain by Beynet et al. (2011)11See: http://uk.reuters.com/article/2012/07/14/uk-spain-economy-reforms-idUKBRE86C0WT2012071412See: http://articles.marketwatch.com/2012-03-30/economy/31258687_1_budget-deficit-higher-taxes-

government13See:

http://www.utilityweek.co.uk/news/news_story.asp?id=197061&title=Spain+plans+tariff+deficit+reforms


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Whenassessingthecurrentenvironmentaltaxationschemethefollowingoptionscouldbe

anticipated:

Increasingthetaxesleviedonenergyproducts;i.e.ImpuestosobreHidrocarburos(Taxon

Hydrocarbon);ImpuestosobreCombustiblesDerivadosdelPetrleo(TaxonFuelOil

Derivatives);ImpuestosobreVentasMinoristasdeDeterminadosHidrocarburos(Taxon

RetailSalesofSpecificHydrocarbons).

Asmentionedabove,thetaxesleviedontransportfuelsarelowerthantheonesleviedin

theneighbouringcountries.Inaddition,thetaxratesonpetrol(diesel)wereraisedby8%

respectivelyby13%sinceJanuary200214

.Theseincreasesintaxrateswerequitelowwhen

comparedwiththesituationinPortugalwheretherateswereincreasedby70%and49%

duringthesameperiod howeverthetaxrateswerelowerin2002.Thismeansthatthetax

rateshavedeclinedinrealtermsandtheshareoftaxesinpetrolanddieselpricesfalland

aremuchlowerthaninneighbouringcountriesandotherEUmemberstates(seeTables1

and2in

the

Annex).

ThepotentialofreformingtheSpanishenergytaxationisanalysedindifferentresearch

projectstherebyillustratingtherevenuepotentialofenergytaxation.Thesescenariosare

basedonenergytaxreformswhicharemoreorlessbasedontheproposalofrevisingtheEU

EnergyTaxationDirectiveof2003(EC,2003).TheproposalwasputforwardbytheECin

2011(EC,2011)andisstillundernegotiationsbetweentheECandEUmemberstates.

TheproposalforeseestomodifythewayenergyproductsaretaxedbyconsideringtheirCO2

emissionsandenergycontent.Thiswouldmeanthatenergytaxeswouldbesplitintotwo

components:aCO2

part

and

an

energy

part.

ThesimulationresultsofLabandeira(2011)areshowingthatrevenuesfromenergytaxes

couldbeincreasedbyupto7.2billionuntil2018,i.e.anincreaseofmorethan50%

comparedtothetotalenergytaxrevenuesofabout14billionin2010.

Anotherstudy(VividEconomics,2012)estimatesadditionalrevenuesfromanenergytax

reformofabout9billionin2018increasingtomorethan10billionin2020.Thisstudyalso

comparesthemacroeconomicimpactsoftheenergytaxreformpackagewithincreased

indirect

or

direct

taxes.

The

authors

are

concluding

that

energy

taxes

would

cause

less

economicharmperunitofrevenuethandirect(i.e.income)orindirecttaxes,whilealso

producingotherbenefits(VividEconomics,2012).

TheSpanishtransporttaxationschemeincludesthefollowingtaxes: ImpuestoEspecial

sobreDeterminadosMediosdeTransporte(DutyonSpecificMeansofTransport);Impuesto

sobreVehculosdeTraccinMecnica(empresas hogares)(Carregistrationtax:companies

households).Asmentionedabove,theoverallrevenuesfromthesetaxescanbedescribed

aslowwhenexpressedasashareofGDP.

14Calculation based on data published by DG Energy History from 2005 onwards at

http://ec.europa.eu/energy/observatory/oil/bulletin_en.htm(accessed on August 20, 2012)


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9

ThreeSpanishautonomousregions(Andaluca,AragonandMurcia)15

introducedcarbon

taxesaspartoftheirairpollutiontaxsystem.TheoveralldesignoftheseCO2taxratesdiffer

widelyfromcarbontaxationschemesimplementedinEUmemberstates,suchasSweden,

Finland,IrelandorDenmark.Furthermore,theCO2taxratesinthesethreeautonomous

regionsarealsoratherlowcomparedtotheEUmemberstatesconsideringforexample,that

thetaxratefordumpingpollutinggasesintotheatmosphereinAragonisequalto200/kt

(i.e.0.2pertonneofCO2emitted)(Eurelectric,2012a)ascomparedtothecurrentSwedish

CO2taxrateof118pertonneofCO2.

SeveralotherAutonomousCommunitiesimplementedairpollutiontaxesleviedonSO2and

NO2.Againthetaxratesareandareintherangeof33to94pertonneSO2inSpainand

ratesareintherangeof50to140pertonneNO2inSpain16

.Thesetaxratesareonlya

fractionofSO2taxratesimplementedinDenmark2,680pertonneSO2orinSweden

5,370per

tonne

NOx.

It

is

noteworthy

to

state

that

this

comparison

provides

avery

rough

indicationofthedifferencesandwouldrequireamoredetailedanalysisoftheairpollution

taxationschemesformakingacompleteassessment.

TherevenuesfromSpanishairpollutiontaxesdroppedfrom28millionin2005to7

millionin2010whichisratherlowwhencomparedtotheDanishsituationwherethe

sulphurandnitrogentaxraisedabout10millionin2010.

WastepolicyisanotherenvironmentalpolicyareainwhichsomeAutonomousCommunities

introducedenvironmentaltaxes.Forexample,Catalonialeviedalandfilltaxonwastewitha

rateof12pertonneandwithahigherrateof21pertonnewastefrommunicipalities

withoutseparate

waste

collection

schemes.

In

addition,

municipal

waste

delivered

to

an

incinerationissubjecttoataxof16pertonne17

.

Europeanpracticeindicatesthatthesetaxescouldbeincreasedconsideringthatthelandfill

taxratesinIrelandarecurrentlyamountingto65pertonne18

andintheUKthestandard

rateissetat64(82)19. TherevenueoftheIrishlandfilltaxrateamountedto43millionin

2010comparedto25millioninCatalonia(2009).

AllrevenuesaccountedfromanywasterelatedtaxesinSpainamountedtoabout315

millionin2010,i.e.representingashareof0.03%ofGDP,ascomparedtolandfilltax

revenuesintheUKofabout1billion(1.34billion),ashareof0.06%ofGDP.

WatertariffsinOECDcountriesarepresentedinFigures1and2intheannex.It

demonstratesthattheSpanishwatertariffsareoneofthelowestintheOECD/EUmember

states.Differentwaterrelatedtaxationschemesaddressingwatersupplyaswellas

15Eurelectric, Taxes and Levies on Electricity in 2010.16

See the Eurelectric report for a more detailed discussion on the design of these taxes.17

SeeI.PuigVentosa,LandfillandWasteIncinerationTaxesTheSpanishCase.

http://ec.europa.eu/environment/waste/pdf/strategy/5.%20Landfill%20and%20incineration%20taxes%20in%

20Spain%20Ignasi%20Puig%20(2).pdf(accessedonAugust20,2012)18See: http://www.edie.net/news/news_story.asp?id=19770&channel=5&title=Landfill+ta19

See:http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pa

geExcise_ShowContent&propertyType=document&id=HMCE_CL_000509#P311_23550


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10

sanitationservicesareinplaceinSpainbutnotatthenationallevelandinsteadatthe

autonomousregionallevelwithlargedifferencesindesignandtariffrates.

Therewouldbesignificantrevenuepotentialfromintroducingageneraltaxforallutilities

abstractingwater.Waterabstractiontaxescantacklewithdifferentenvironmental

challenges,suchasleakageandspillsforwatersupply.Butifthetaxappliesto90%of

abstractedvolumes,thentherewillbeastrongincentiveforutilitiestoreinforcetheir

capacitytoreactquicklyagainstspills,whichmaybringleakageratesdownfromratesof30

40percentprevalentinmanyareas,seeforexampletheexperienceinDenmark.

Urbanwastewaterplantsarenotalwayscomplyingwiththestandardsforeffluent

dischargesallyearround,thisisbecausefullcompliancecanbetechnicallydemandingand

requireadditionalequipment.Introducingtaxesforendofpipedischargesoneachofthe

relevantemissions(N,PandCOD),balancedagainsttheestimatedbenefitsofcleanwater,

wouldprovide

incentives

to

improve

on

compliance.

Similar

taxes

could

be

applied

to

major

industrialemitters,whererelevant.TheNetherlandshasbeenthepioneerwithtaxesfor

emissionstosurfacewaters.ConsideringtheimportanceoftourisminSpain,aclear

measuretosecurewaterqualitywillbelikelytoyieldeconomicreturns

Thephasingoutofthefinancialsupportforthecoalsectorandtheabolishmentoffueltax

exemptionswouldalsofreeuprevenuesandraisetaxrevenueswhichcouldbeusedforthe

fiscalconsolidationprocess.


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11

Reference

Andersen,M.S.andEkins,P.(eds.),2009,CarbonEnergyTaxation:LessonsfromEurope,Oxford

UniversityPress.

Bassi,S.,tenBrink,P.,Pallemarts,M.andvonHomeyer,I.,2009,FeasibilityofImplementinga

RadicalETRanditsAcceptance.FinalReport(TaskC)oftheStudyontaxreforminEuropeoverthe

nextdecades:implementationfortheenvironment,forecoinnovationandforhousehold

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Annex

AnoverviewofenvironmentaltaxesimplementedintheAutonomousCommunities

Andalusiawatermanagement;coastalwaterdischarge;airpollution(includingCO2

emissions);hazardouswaste;radioactivewaste

Aragonairpollution(includingCO2emission);environmentaldamagecausedbylarge

departmentstores;environmentaldamagecausedbytheinstallationofcabletransport;

othertransport;watermanagementandpollution

Asturiaswatermanagement

BalearicIslandswatermanagement

CanaryIslandsenergy

Cantabria

waste

management;

plastic

bag;

water

management

and

water

pollution

CastilleLaManchawatermanagementandpollution;hazardouschemicals;electricity

production(nuclear);airpollution

Cataloniawatermanagementandpollution;waste

Extremaduraelectricityproduction;waterpollution

Galiciawatermanagementandpollution;airpollution;environmentaldamagecausedby

someusesofwatersfromreservoirs

LaRiojawatermanagement

Madridwaste;waterpollution

Murciaairpollution;coastalwaterdischarge;waste;watermanagement

Navarrawatermanagementandpollution

Source:OECD/EEAdatabaseoninstrumentsusedforenvironmentalpolicyandnaturalresource

management(http://www2.oecd.org/ecoinst/queries/index.htm,accessedonAugust7,2012

Table1:Percentageoftaxesindieselpricesfornoncommercialuse(in%)

2003 2004 2005 2006 2007 2008 2009 2010 2011

Spain 56.2 52.7 46.7 44.9 45.3 40.5 49.6 46.3 42.5

France 65.8 63.5 57.2 55.1 55.4 50.1 59.1 53.8 49.1

Portugal 56.8 55 50 49.7 51 45.8 52.9 48.6 45.3

Italy 62.6 59.6 53.8 52.2 52.8 48.1 55.8 51.5 48.6

UK 74.1 72.4 66.7 64.5 65.3 57.8 65.4 62.8 58.6

Source:IEA,EnergyPrices&Taxes,2nd

Quarter2012


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Table2:Percentageoftaxesinpremiumunleaded(RON95)gasolineprice(in%)

2003 2004 2005 2006 2007 2008 2009 2010 2011

Spain 62.3 59.4 55.3 52.6 52.1 49.5 55.9 52.2 48.8

France 74.3 71.9 67.1 64 63.7 61.1 66.6 61.5 57.1

Portugal 68.1 66.5 62.8 60.9 61.4 59 63.9 59.5 56.4

Italy 67.8 66.3 62.9 60.5 60.1 57.5 62.5 58 55.3

UK 75.5 73.6 69.2 66.6 66.7 61.9 67.8 63.8 60.3

Source:IEA,EnergyPrices&Taxes,2nd

Quarter2012

Figure1:

Unit

price

of

water

supply

and

sanitation

services

to

households

including

taxes,

in

OECD

countries,2008(unit:USDpercubicmetre)

Source:OECD,2010,PricingWaterResourcesandWaterandSanitationServices,Paris.


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Figure2:Comparisonofunitpricesofwaterservicesandwastewaterservicestohouseholds,

includingtaxes,inOECDcountries,2008(unit:USDpercubicmetre)

Source:OECD,2010,PricingWaterResourcesandWaterandSanitationServices,Paris.

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