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EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark
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EaP GRREN: Experience of designing and implementing taxes on environmentally harmful products in Denmark

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This presentation gives an account of Denmark's experience of designing and implementing taxes on environmentally harmful products. It was delivered at the meeting on "Economic instruments for greener …

This presentation gives an account of Denmark's experience of designing and implementing taxes on environmentally harmful products. It was delivered at the meeting on "Economic instruments for greener products in EU's Eastern Partnership countries" (EaP GREEN).

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  • 1. Experience of designing and implementing taxes on environmentally harmful products in Denmark Torbjørn Christensen Senior advisor
  • 2. Green taxes in Denmark 2 In Denmark there are green taxes on • Energy products • Environmental harmful products • Motor vehicles The taxation of energy products is harmonised by the energy taxation directive in the EU. The directive sets minimum levels of taxation.
  • 3. Green taxes in per cent of GDP in Denmark 3Source: Ministry of Taxation 0 1 2 3 4 5 0 1 2 3 4 5 00 01 02 03 04 05 06 07 08 09 10 11 12 In 2012 the revenue from green taxes were about 69 billion DKK (9 billion euros) Green taxes account for around 8 per cent of total taxes in 2012 Percent Percent Years
  • 4. Introducing green taxes I 4 • The optimal tax on a environmental harmful products is a Pigovian tax, where the tax equals the negative externality caused by the product • A broad tax base will decrease distortions • Introducing a tax on a limited base can have very high administrative costs • For control • To avoid evasion • A green tax can increase the administrative burdens for companies as well as impose higher production costs • A simple legislation can make the administrative cost more manageable
  • 5. Introducing green taxes II 5 • A green tax can be more costly for some companies than others • In some cases these companies can get reimbursement of the tax to reduce their costs • This differentiation can raise a question about state aid • State aid in the EU requires an approval by the EU Commission • The registered companies pay the tax to the authorities however the tax is often passed on the consumers through higher prices • Therefore a tax can increase the cross-boarder shopping (petrol and wood)
  • 6. Green taxes in Denmark – taxes on energy 6 The tax is based on the energy content of the taxable products and the tax base includes: • Petrol • Mineral oils • Coal • Natural gas • Electricity. Taxes on CO2, NOx and SO2 are defined as environmental taxes.
  • 7. Green taxes in Denmark – taxes on motor vehicles 7 • Registration tax • Circulation tax (tax on ownership) – annual tax based on the fuel consumption of the car (for older cars it is based on the weight of the car) • Countervailing duty – a tax on diesel cars • Tax on diesel cars without ‘particle filter’ • Sur charge for private use of vans
  • 8. Green taxes in Denmark – environmental taxes 8 Besides the environmental taxes on CO2, NOx and SO2 Denmark also has environmental taxes on: • Waste and raw materials • Water and wastewater • Pesticides, CFCs, PVC and phthalates • Packaging, disposable tableware and carrier bags • Nitrogen fertilizers, growth promoters, mineral phosphorus.
  • 9. Tax on fertilisers 9 • The tax on fertilisers was introduced August 1, 1998 • It is related to the rules on the use of fertilisers from farming • Farms are exempted from the tax since they are regulated by other legislation, where they have to keep a report of their use of fertilisers • The tax is therefore seen as a protective rule • The rate is 5 DKK (0,7 euro) per kg of nitrogen • The revenue was 22 million DKK (3 million euro) in 2013
  • 10. Tax on pesticides 10 • The tax on pesticides was introduced January 1, 1996 and changed on July 1, 2013 • Before it was a value-based tax on the retail price • For goods used to control insects, snails and so on the tax was 35% of the retail price, including the tax itself • For goods used to control plant growth, plant illness and so on the tax was 25% of the retail price, including the tax itself • For other goods used to control algae and so on the tax was 3% of the retail price, including the tax itself • The revenue was 475 million DKK (64 million euro) in 2011 • The change of the tax was agreed upon in 2012, and the farmers started to react to the new and higher tax which gave a higher revenue in 2012 • Now it is amount-based differentiated by health and environment criteria
  • 11. Tax on packaging 11 • The Danish tax on packaging consists of a tax on packaging (weight- and volume-based), disposable tableware, carrier bags and PVC-foil used for food • The purpose of the tax is to reduce the amount of waste and create an incentive to use less packaging in general and use more environmental friendly alternatives • The revenue is around 1 billion DKK (135 million euro) in 2013 • Companies who produce taxable goods with the purpose of sale have to register with the authorities • The registered companies must determine the taxable amount and pay the tax • The weight-based tax on packaging was abolished from 2014, mainly for administrative reasons.
  • 12. Revenue from the tax on pesticides and the tax on packaging 12 0 27 53 80 107 133 160 0 200 400 600 800 1,000 1,200 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tax on pesticides Tax on packaging Years Millions DKK Millions euro

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