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Environmental tax statistics

From Statistics Explained

Data from October 2013. Most recent data: Further Eurostat information, Main tables and Database.

This article provides an overview of environmental taxes in the European Union (EU). An environmental tax is one whose tax base is a physical unit (or a proxy of it) of something that has a proven, specific negative impact on the environment. European statistics distinguish four different types of environmental taxes relating to: energy, transport, pollution and resources; note that value added tax (VAT) is excluded from the definitions employed in this article.

Table 1: Total environmental tax revenue by type of tax, EU-27, 2011 - Source: Eurostat (env_ac_tax)
Figure 1: Total environmental tax revenue by type of tax, EU-27, 2000-2011 (EUR 1 000 million) - Source: Eurostat (env_ac_tax)
Figure 2: Total environmental tax revenue, EU-27, 2000-2011 (%) - Source: Eurostat (env_ac_tax)
Figure 3: Environmental taxes as % of GDP and as % of total taxes and social contributions, 2011 - Source: Eurostat (env_ac_tax)
Figure 4: Environmental taxes by tax category, 2011 (% of total environmental taxes) - Source: Eurostat (env_ac_tax)
Figure 5: Energy taxes by economic activity, 2010 (1) (% of energy tax revenue) - Source: Eurostat (env_ac_taxind) and (env_ac_taxind2)
Figure 6: Transport taxes by economic activity, 2010 (1) (% of transport tax revenue) - Source: Eurostat (env_ac_taxind) and (env_ac_taxind2)
Figure 7: Implicit tax rate on energy (deflated), EU-27 - Source: Eurostat (tsdcc360)

Environmental taxes have been increasingly used to influence the behaviour of economic operators, whether producers or consumers; these taxes generate revenue that can potentially be used to promote further environmental protection. Environmental taxes are analysed in more depth in another article.

Main statistical findings

Environmental taxes in the EU

Table 1 shows that the total revenue from environmental taxes in the EU-27 in 2011 was about EUR 302 900 million; this figure equates to 2.4 % of gross domestic product (GDP) and to 6.2 % of the total revenues derived from all taxes and social contributions.

As can be seen in Figure 1, environmental tax revenue in the EU-27 increased during the period between 2001 and 2007 before the effects of the financial and economic crisis caused a reduction in economic activity, leading to falling tax revenues in 2008 and 2009. The decrease in revenues during the crisis only offset to some degree the general development of rising environmental tax revenues and in 2010 environmental tax revenues returned to an upward path. By 2011, the level of environmental tax revenues was some EUR 5 000 million higher than their previous peak in 2007.

While EU-27 environmental tax revenues increased in value terms between 2001 and 2007 as well as in 2010 and 2011, the size of these taxes relative to GDP and relative to the total revenue from all taxes and social contributions did not follow the same pattern (see Figure 2). Environmental tax revenues relative to GDP stayed almost constant between 2001 and 2003 and then decreased from 2003 to 2008 (as environmental tax revenues rose at a slower pace than overall economic growth); in 2009 there was an increase in the relative importance of environmental tax revenues relative to GDP after which there was little change, with a slight decrease in 2010 followed by a similar increase in 2011. Environmental tax revenues as a share of total revenue from taxes and social contributions decreased each year from 2003 to 2011 with the notable exception of 2009.

The level and rate of environmental taxation varies across European countries. Comparisons should be made with caution: for instance, low revenues from environmental taxes could signal relatively low environmental tax rates, or could result from higher tax rates that have had the effect of changing behavioural patterns among producers and consumers. Higher levels of environmental tax revenue could be linked to individuals or businesses purchasing taxed products outside of their country of residence if the tax rates abroad are lower than in their domestic market (for example, crossing a border to purchase petrol or diesel).

Figure 3 shows environmental tax revenues both in relation to GDP and in relation to total revenues from all taxes and social contributions. The importance of environmental taxes was relatively high in the Netherlands, Slovenia and Malta: these three countries occupied positions two to four in terms of a ranking of EU Member States based on these two ratios. In 2011, Bulgaria maintained its position from 2010 with the highest share of environmental taxes in total revenue from taxes and social contributions (10.6 %). Latvia also derived a relatively high share of taxes and social contributions revenue from environmental taxes, the fifth highest among the EU Member States. Turning to the indicator relative to GDP, Denmark headed the ranking, with environmental taxes equivalent to 4.1 % of GDP, while Finland occupied the fifth place in this ranking. At the other end of the ranking based on GDP, Spain, Lithuania and to a lesser extent France, Romania and Slovakia recorded relatively low levels of revenue derived from environmental taxes, as did Iceland.

Environmental taxes by type

Energy taxes (which include taxes on transport fuels) represented, by far, the highest share of overall environmental tax revenue – accounting for 74.7 % of the EU-27 total in 2011 (see Figure 4). These taxes were particularly prominent in Lithuania, Luxembourg, the Czech Republic and Romania, where they accounted for upwards of 90.0 % of environmental tax revenues. In contrast, energy taxes represented less than 60.0 % of the revenues from environmental taxes in Denmark and Ireland, and around 51 % in Malta and the Netherlands.

Transport taxes made the second most important contribution to total revenues from environmental taxes, some 20.9 % of the EU-27 total in 2011. However, their relative significance was considerably higher in Malta, Denmark and Ireland, accounting for a share between 35.5 % and 44.4 % of all revenues from environmental taxes; the smallest shares of transport taxes in total revenues from environmental taxes (less than 3.0 %) were in Lithuania and Estonia.

Pollution and resource taxes represented a relatively small share (4.4 %) of total environmental tax revenues in the EU-27 in 2011. This pattern was repeated across most of the EU Member States, as only the Netherlands and Estonia reported that more than 10.0 % of their total environmental tax revenue was raised from taxes on pollution and resources. Less than 1.0 % of environmental tax revenues were raised from pollution and resource taxes in Austria, Romania, Luxembourg and Portugal, while Greece and Cyprus did not raise any revenue from this type of tax.

Environmental taxes by economic activity

Across those EU Member States for which recent data are available (2007, 2008 or 2010, see Figure 5), households paid an average of just under half (48.4 %) of all energy taxes that were collected by governments, while 47.6 % of the total was paid by businesses (in agriculture, fishing, mining, manufacturing, electricity supply, construction and services, including transportation and storage) and some 3.3 % by non-residents. Luxembourg stood out, insofar as 37 % of its energy tax revenues were paid by non-residents (largely due to non-residents purchasing petrol and diesel).

The contribution of agriculture, forestry and fishing to total energy taxes was lower than 6.0 % of the total paid by all activities in all of the EU Member States (and Norway), aside from Lithuania (2009). For most European countries mining, manufacturing, electricity supply, construction and services (excluding transportation activities) contributed between 25.0 % and 45.0 % of total energy taxes, with only Luxembourg, Spain and Lithuania (2009) below this range.

Generally the highest share of energy tax revenues from businesses came from the largest activity grouping shown in Figure 5 – namely, that covering mining, manufacturing, electricity supply, construction and services other than those related to transportation and storage. This was particularly true in Bulgaria and the Czech Republic where these activities accounted for upwards of 50 % of all energy tax revenues from businesses.

In 5 out of the 20 Member States for which data are available in 2007, 2008 or 2010, in excess of 20.0 % of energy tax revenues from businesses came from transportation and storage activities. This activity’s share was particularly high in Spain, Latvia, Finland and Belgium where more than 25 % of all energy tax revenues from businesses came from the transportation and storage sector.

On average, 68 % of the transport tax revenues collected by governments in those EU Member States for which data are available (see Figure 6) were paid by households, 17 % by businesses (agriculture, fishing, industry, construction and services other than those related to transportation and storage), 11.6 % were not allocated; the share paid by transport and storage businesses was 3.2 %, while that paid by non-residents was negligible (0.1 %). The relative importance of households as contributors to transport tax revenues was the lowest in Bulgaria, Lithuania and the Czech Republic.

Implicit tax rate on energy

The implicit tax rate on energy is defined as the ratio between energy tax revenues and final energy consumption calculated for a calendar year. Energy tax revenues are measured in euros (deflated with the final demand deflator) and the final energy consumption is measured in tonnes of oil equivalent; as such the implicit tax rate on energy is expressed in terms of euros per tonne of oil equivalent (EUR per TOE). The implicit tax rate on energy is not influenced by the size of the tax base and provides a measure of the effective level of energy taxation. Data show that in real terms (having deflated the energy tax revenue) taxation on energy had a downward trend in the period from 2002 to 2008 and that the fall was sharpest towards the end of that period (see Figure 7). However, during the financial and economic crisis, the indicator showed considerable variation: after a sharp increase in 2009 the implicit tax rate on energy for the EU-27 decreased quite sharply in 2010, dropping to a level similar to that shown between 2005 and 2007; in 2011, the rate bounced back to a level similar to that last observed in 2003 and 2004.

Data sources and availability

Eurostat using Table 9 from the ESA transmission programme, gathers data on environmental taxes for four categories of environmental taxes (energy, transport, pollution and resources); Then the data are validated and published.

Eurostat collects also data on environmental taxes at a more detailed level, by economic activity. A Eurostat publication titled, ‘Environmental taxes - a statistical guide’ constitutes the methodological basis; this annual collection of data has been based so far on a Gentlemen’s Agreement.

Data relating to environmental taxes can be used to analyse the revenue stream from such taxes, as well as providing a relative measure of the importance of these taxes through the calculation of ratios relative to GDP or the total revenue from all taxes and social contributions. In the first case, the comparison helps to provide an understanding of the tax burden. In the second case, the comparison helps assess whether or not there is a shift towards environmental taxes, in other words, shifting the tax burden from other taxes (for example, on labour income) towards environmental taxes.

Environmental tax revenue can also be allocated according to the different economic activities paying the taxes. Eurostat collects data on environmental taxes using a breakdown by economic activity (the NACE Rev. 1.1 and NACE Rev. 2 classifications supplemented by information for households, non-residents and a category not allocated).

Increasing revenues from environmental taxes should be interpreted with caution. The increases may be caused by the introduction of new taxes or an increase in tax rates, or alternatively may be linked to an increase in the tax base.

Satellite accounts are a set of accounts that can be used to supplement national accounts; they exist/are in the process of being developed in a range of areas (for example, health accounts, tourism accounts or environmental accounts). An important feature of satellite accounts is that the basic concepts and classifications of the national accounts framework are retained. Regulation (EU) No 691/2011 on European environmental economic accounts was adopted on 6 July 2011; this makes the collection and delivery of data on environmental taxes obligatory from 2013 onwards. The Regulation provides a framework for the development of various types of environmental accounts (also referred to as modules). Environmental taxes by economic activity are one of the three modules included in the Regulation (Annex II).

Context

Economic instruments for pollution control and natural resource management are an increasingly important part of environmental policy in the EU Member States. The range of instruments that are available includes, among others, environmental taxes, fees and charges, tradable permits, deposit-refund systems and subsidies.

Environmental taxes have been increasingly used to influence the behaviour of economic operators, whether producers or consumers. The EU has increasingly favoured these instruments because they provide a flexible and cost-effective means for reinforcing the polluter-pays principle and for reaching environmental policy objectives. The use of economic tools for the benefit of the environment is promoted in the Proposal for a new EU Environment Action Programme to 2020 - 7th environment action programme (EAP), the renewed EU sustainable development strategy and the Europe 2020 strategy.


Further Eurostat information

Publications

Main tables

Environmental accounts (t_env_acc)
Total environmental tax revenues as a share of total revenues from taxes and social contributions (ten00064)
Total environmental tax revenues as a share of GDP(ten00065)

Database

Environmental accounts (env_acc)
Monetary flow accounts (env_acm)
Environmental tax revenue (env_ac_tax)
Environmental taxes by economic activity (NACE Rev. 1.1) (env_ac_taxind)
Environmental taxes by economic activity (NACE Rev. 2) (env_ac_taxind2)

Dedicated section

Methodology / Metadata

Source data for tables, figures and maps (MS Excel)

Other information

External links

See also


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