6 March 2014

EU Green Tax review and high revenue potential

A recent European Commission study from data collected on 12 member states, has shown that, in the year 2016, environmental fiscal reforms such as increased taxes on causes of air and water pollution, could generate 35 billion euros in revenue for the European Union, which could very well climb up to 100 billion euros by 2025. Depending on the nation, the potential annual revenue for each member state could range from 1% of GDP to 2.5% of GDP.

The report generated from the study also suggests that green taxes should have a relatively lower cost than that of other taxes and also notes that, where possible: ‘member states should make use of the existing administrative apparatus to collect revenues, so as to minimize administrative costs. This might include making use of existing reporting or monitoring obligations. It might be considered also that where these do not exist, the fact that taxes can help to drive the provision, and capture of, data has some value in itself beyond that of the revenue generated by the tax.’

The promising numbers which came out of this study, have captured the European Commission’s attention, who is seriously considering of lowering or even removing labor levies and increasing tax on pollution. They claim that going “green”, will not only improve unemployment levels, but will also ensure that the European Unions’s macroeconomic policies are perfectly aligned with their environmental, economic and social point of view. Janez Potocnik, EU Environment Commissioner and a supporter of this transition, said: “Environmental fiscal reforms have the potential to almost double the revenues they currently bring to national treasuries, with benefits for our environment as well as scope for cutting taxes on employment or cutting deficit. That’s a powerful argument for changing the status quo.”


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