as own resources to finance the EU budget Dr Constanze Adolf amp Klaus Röhrig 22 September 2016 17 th GCET Groningen Environmental fiscal reform II Green Budget Europe ID: 581748
Download Presentation The PPT/PDF document "The case for using green taxes" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
The case for using green taxes as ‘own resources’ to finance the EU budget
Dr Constanze Adolf & Klaus Röhrig
22 September 2016
17
th
GCET – Groningen –
Environmental fiscal reform II Slide2
Green Budget
Europe
Founded 2008
Brussels-based EU-wide experts platform Promoting Market-Based Instruments Our vision:An ecological and social market economy, in which"prices tell not only the economic, but also the ecological truth" (Ernst Ulrich von Weizsäcker) Slide3
OutlineA
momentum for Green Own ResourcesThe current system and its deficitsEcological own resource candidates
Example: EU carbon taxKey messages and conclusionSlide4
Study backgroundCommissioned by the Greens/EFA
Basis for intra party debate on EU budget reformAvailable on our website.Slide5
The current system and its deficitsSlide6
Communicating the EU budget and its deficits
Opacity
Demise of genuine own resources
Insufficient
democratic accountability
Late paymentsNo market steering effects of EU revenues
Source:
Green Budget Europe (2016). Green Taxes as a Means of Financing the EU Budget: Policy Options. Study published in July 2016.Slide7
Definition: “Green Own Resources”Genuine own resources
providingEuropean public goods
Transformative potential of EU budget
Fair competition
within the Single Market
Polluter-pays-principle
Less
tax competition
Better allocation of resourcesSlide8
Promising Candidates
Road fuel taxCarbon tax
Energy taxRevenue from European Court rulings Slide9
Example: Road fuel tax
Tackles emissions of the transport sector, as well as congestion, air pollution and related public health impacts
Addresses the diesel-petrol price gap
Reduces
fuel tourism and eliminates distortions in Single Market
‘Dieselgate’Slide10
Example: Carbon TaxInternalise the detrimental effects of carbon emissions
Provide incentives for consumers, producers and investors to shift capital towards low-emission sectorsSupport the European Union’s commitment to its 2050 greenhouse gas reduction targets as well as implementing the Paris Agreement
An EU-wide carbon tax can produce a reliable price for carbon
Carbon price is crucial step in decarbonisation
No coherent carbon price in non-ETS sectorsSlide11
Assessment criteria for green own resources Slide12
OutcomeSlide13Slide14
ConclusionDifferent strengths and weaknesses of the four optionsResults feed into discussions on an alternative EU funding system
Provides starting point for further in-depth researchSlide15
Source: projectmanagementdocs.com/
We have all the evidence …..
… why not acting? Slide16
Candidate taxes assessed
in the study
EU carbon taxEnergy taxRoad Fuel tax
Air ticket tax
Border Carbon Adjustments
EU Corporate Income Tax
Financial Transaction Tax
CJEU FinesSlide17
Better communication necessaryDetermine
crucial target groups and their needsDevelop tailored messages by framing
arguments in response to main concerns
Economy Frame
(competitiveness and revenue
stability)Equity Frame (social equity and regressivity)Ecology Frame (environmental effectiveness)Europe Frame (subsidiarity)Slide18
Exploring the myths
Bad for Competitiveness?Ensure competitiveness in low-carbon market (carbon tax DK)Disrupt
Social Equity?Environmental taxes are less regressive than other forms of taxation
Environmentally
Ineffective?
Multiple success stories prove the opposite (1)Revenue StabilityDepends on the tax design and tax rate flexibility over time Infringement of the Subsidiarity principle?Green own resources provide European added value unattainable by member states alone
(1)
Overview of environmental tax reforms and their ecological outcomes in the
final report
of the Green Fiscal Commission, 2009.Slide19
Example: EU carbon taxSlide20
Example: Carbon TaxSlide21
Economy
Ecology
Equity
Europe
Green Community
Decoupling economic growth from GHG emissions
Prevent
“Low-carbon leakage”
Boost investments in low-carbon technology
Effective instruments to achieve
climate commitmentsApplying the polluter-pays-principle
Immediate action
Guarantee
social justice
No disproportionate burden on low-income households
EU
-wide carbon tax
In
favour of a stronger and more united Europe, in particular on climate matters
Citizens
No
further financial burden, no overall tax increases
No negative impact on jobs and growth
Polluter-pays-principle
Health issues connected to environmental
pollution
No disproportionate burden on low-income households
Burden should be compensated
More
Europe only, if Member states cannot provide the public good effectively
Decisions on budget
need to become more transparent and democratic
Local Councillors
Secure
competitiveness of regions (especially those with energy-intensive industry)
Beneficial impact on local environment (regions with high air pollution levels)
Interregional
equity: no disproportionate negative impact on poorer regions (regions with high emission levels and low economic growth)
Participation
in policy-process
Decisions on budget
need to become more transparent and democratic
Industry & Trade Unions
Secure international
competitiveness of energy-intensive industry (tax exemptions)
Enable
investments
Clear
long-term strategy for emission reduction
Allow for gradual
transition process
No disproportionate burden on workers and low-income households (Trade Unions)
More
Europe only, if Member states cannot provide better market conditions
Member States
No
harm to national industry
No big shift in contribution ratio
Revenue
stability
Assistance in Effort
sharing
Allow for gradual transition process
Interstate equity:
no disproportionate negative impact on poorer countries with high emission levels
No
transfer of fiscal competences
Retain discretion on tax rate and exemptions
Example: Carbon TaxSlide22
Economy
Ecology
Equity
Europe
Green Community
Enhance the development of low-carbon industry and the
decoupling of economic growth from GHG emissions
in the medium- and long-term
Internalise the costs
of up to 55% of the EU’s total GHG emissionsCarbon content directly taxed (polluter-pays-principle)
Implement Paris Agreement and SDGs
Less regressive
than other forms of taxation (income
tax, VAT)
Compensatory measures can offset regressive effects
Strong
case for
European collective action
Most
effective if EU-wide and
aligned tax rates
Provide
transnational public good
(GHG reduction)
Citizens
Contribute to economic growth
, if implemented as a tax shift
Secure competitiveness
among Member States
Carbon content directly taxed (
polluter-pays-principle
)
Incentivise a
shift in consumer and producer behaviour
towards low-carbon activities
Less regressive
than other forms of taxation (income
tax, VAT)
Compensatory measures can offset regressive effects
Most
effective if EU-wide and
aligned tax rates
Provide
transnational public good
(GHG reduction)
Local Councillors
Secure competitiveness
among Member States
Incentivise a
shift in consumer and producer behaviour
towards low-carbon activities
Use of
transition periods
and
tax reductions
for specific industries/regions
Need
to ensure participation in national decision-making on tax rates, tax exemptions and compensatory measures (
subsidiarity
)
Industry & Trade Unions
Stimulate the
investment in clean energy and low-carbon technology
Provide
investor certainty
and allow for a clearly specified
transition period
Incentivise a
shift in consumer and producer behaviour
towards low-carbon activities
Possibility of country-specific
tax reductions
for energy-intensive industry
Most
effective if EU-wide and aligned tax ratesProvide transnational public good (GHG reduction)Member StatesSecure competitiveness among Member StatesRedistribution
of national contributions might entail compensations to ‘net losers’Make sure the EU is on track for its commitments under the ESD/ESR, the Paris Agreement and the Sustainable Development GoalsUse of transition periods and tax reductions for specific industries/regionsPower to levy taxes remains at MS levelNeed to ensure participation in national decision-making on tax rates, tax exemptions and compensatory measures (subsidiarity)
Example: Carbon TaxSlide23
Example: Carbon Tax – Main messages1 Achievement of the 2030 Energy Union targets necessitates annual investments of EUR 200bn between 2020-2030, yet in 2015 only EUR 34.3bn have been invested in clean energy.
2 Vivid Economics, Green Budget Europe (2012). Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits.
Economy
An EU-wide
carbon
tax canstimulate the investment in clean energy and low-carbon technology needed to achieve the European sustainability Strategy until 2030 and beyond (1)enhance the development of low-carbon industry and the decoupling of economic growth from GHG emissions in the medium- and long-term
contribute to economic
growth, if
implemented as a tax shift (2)secure competitiveness among Member States
provide investor certainty and allow for a clearly specified transition period
EcologyAn EU-wide carbon tax canCarbon content directly taxed (
polluter-pays-principle
)
Internalise the costs
of up to 55% of the EU’s total GHG emissions
Incentivise a
shift in consumer and producer behaviour
towards low-carbon activities
Make sure the EU is on track for its commitments under the
Paris Agreement
and the
Sustainable Development GoalsSlide24
Example: Carbon Tax – Main messages1
EEA (2011). Environmental tax reform in Europe: implications for income distribution. Technical Report No 16/2011. European Environmental Agency.2 Vivid Economics, Green Budget Europe (2012). Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits.
Equity
An EU-wide
carbon
tax canbe implemented with a virtual non-regressive effect if country-specific compensation mechanisms accompany its introductionExperience with success stories of carbon taxation being part of a broader tax shift, as for example in Sweden, has shown “
almost no evidence of regressive effects” (1)
MS can provide vulnerable high-emitter industries with a
temporary tax exemptionEurope
An EU-wide carbon tax canprovide unique European public goods (reduction in GHG emissions, tax competition)Slide25
Example: Carbon Tax – Target groupsLocal CouncillorsSubsidiarity should be respectedGrant participation
in the design of compensatory measures (social schemes for regional workers, tax reductions for local industries)Industry and Trade UnionsLow-carbon industry: stimulate
investmentEnergy-intensive industry: transitionary tax expendituresTrade unions:
Grant participation
in the design of compensatory measures (social schemes for regional workers, tax reductions for local industries)Slide26
ConclusionsCurrently difficult to gain political capital with subjects like “
taxation”, “budget reform” and “European Union”
There is enough evidence to defend GORs against widespread concernsBut
follow-up needed
: Develop comprehensive communication strategies to reach outside the expert circles
And spread the word!Slide27
Dr Constanze Adolf
Constanze.Adolf@green-budget.eu
Please join us and share our vision of Europe as a pioneer of green fiscal policy, green technology and a green economy!
Become
member of GBE, and be a part of a unique, non-profit expert platform on environmental fiscal
reform!.