Taxes on products considered polluting are struggling to gain ground in the European Union despite backing from Brussels, in the face of strong opposition from movements like France’s “Yellow Vests”.
In 2011 the European Commission envisaged that by “2020 a major shift from taxation of labour towards environmental taxation… will lead to a substantial increase in the share of environmental taxes in public revenues”.
So far this has not come to pass. Since then the share of environmental tax revenues in the EU, which stood at 6.18 percent, has fallen almost every year.
Nonetheless, eco-taxes in 2017 generated around 369 billion euros (some $303 billion).
Leaders and laggards
Latvia leads the bloc in implementing eco-taxes, making up some 11.11 percent of its fiscal revenue in 2017, according to data from EU statistics authority Eurostat.
Slovenia and Greece also top the list, generating respectively 10.13 percent and 9.5 percent of their revenue from eco-taxes, well above the EU country average of 5.97 percent.
By contrast, Luxembourg brings in the least revenue from eco-taxes with 4.25 percent, while Germany (4.46 percent), Belgium (4.74 percent), France (4.77 percent) and Sweden (4.8 percent) do not fare much better.
Eco-taxes in Germany are based on reforms passed in 1999-2000. Germans now pay a tax on electricity of 6.41 cents per kilowatt hour that directly finances renewable energy infrastructure.
In Hungary, meanwhile, an eco-tax is automatically charged through VAT on products that generate waste such as plastic bags, batteries, leaflets and packaging.
Bulgaria also charges eco-taxes on vehicle registration, ranging from 64 euros to 158 euros depending on the age of the car. This does not apply to electric cars.
Greeks meanwhile have paid for plastic bags in supermarkets since January in a well-received measure, with experts noting a “significant” reduction in the number of bags used. The government says the revenue collected will be used in the recycling sector.
Energy in Latvia is heavily taxed: up to 509 euros per 1,000 litres for fuel oil, while coal is so highly taxed that it is virtually impossible to open a coal power plant. Tax on natural gas, however, is lower.
Backlash and backtracking
The French “yellow vest” protests are the latest expression of opposition to eco-taxing, sparked by a proposed fuel tax hike that led to widespread demonstrations and road blockages in late 2018.
After three weeks of protests, the government scrapped the fuel tax set to be introduced in January 2019, but protests have continued.
In Bulgaria, where eco-taxes have generally been received without opposition, an attempt at raising annual taxes on vehicles more than 10 years old sparked debate and the government was forced to backtrack, deciding instead to reduce taxes on new vehicles.
Protests broke out in Slovenia — a leader in eco-taxes — in 2014, over a rise in C02 emissions taxes. The government toned down the measure to avoid hitting major polluters too hard.
In Estonia, the shale oil industry managed to obtain a reduction in taxes for a few years.
And in Sweden, a carbon tax was a central issue in the 2018 legislative elections, in which the far-right Swedish Democrats came third in polls after basing part of its campaign on reducing the tax, notably for farmers following a drought.