OECD Recommendations on Environmental Taxation in Portugal

Presentation at the conference

"Green Taxation: a contribution to sustainability" 30 April 2013, Lisbon

By

Nils Axel Braathen OECD, Environment Directorate

Nils-Axel.Braathen@oecd.org

1

Recommendations in the 2011 EPR

Analyse how environmentally related taxes could contribute

to fiscal consolidation, whilst offsetting reductions in more

distortionary taxes on labour and corporate activity.

Continue to broaden the use of environmentally related taxes

by introducing other such taxes (e.g. on air pollutants and

pesticides), and by linking a component of fuel taxes to the

carbon content of fuels.

Review the current array of tax exemptions and discounts,

with a view to phasing out those that are costly and

environmentally harmful; ensure that the water and waste

management taxes are passed on to final users; provide

targeted support for those households adversely affected by

energy, water and waste prices.

2

Revenues from environmentally related taxes In per cent of GDP, Selected countries

3 -1

0

1

2

3

4

5

% o

f GD

P Other

Motor vehicles

Energy

* 2010 figures ** 2009 figure

Revenues from environmentally related taxes In per cent of GDP, Portugal

4 0

20

40

60

80

100

120

140

160

0

1

2

3

4

5

6

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Ind

ex, 2005=100

% o

f G

DP

Energy products

Motor vehicles and transport

Other

Rotterdam spot price, real, Index, 2005=100

Real household petrol excise, Index, 2005=100

Real household petrol price, Index, 2005=100

5

Revenues from environmentally related taxes In per cent of total tax revenue, Portugal

0

20

40

60

80

100

120

140

160

0

2

4

6

8

10

12

14

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Ind

ex, 2005=100 %

of

tota

l tax

rev

enu

e

Energy products

Motor vehicles and transport

Other

Rotterdam spot price, real, Index, 2005=100

Real household petrol excise, Index, 2005=100

Real household petrol price, Index, 2005=100

1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Tax on petroleum products 2,194 1,969 2,406 2,892 3,072 3,121 3,126 3,173 3,325 3,189 3,177 3,140 3,002

Tax on motor vehicle sales 664 1,239 1,226 1,186 1,018 1,153 1,212 1,205 1,221 946 714 832 644

Local tax on vehicles 38 55 62 68 75 80 90 93 94 100 135 115 130

Local tax on vehicles use 16 24 27 29 32 34 39 40 40 43 42 47 47

Circulation tax 0 0 0 0 0 0 0 0 6 106 132 155 231

# -- Road taxes 34 43 110 78 97 74 76 79 85 0 0 0 0

Waste management tax 0 0 0 0 0 0 0 0 3 7 12 16 18

Hunting and fishing licenses 7 1 1 1 1 1 1 1 1 3 1 1 0

TOTAL 2,953 3,331 3,831 4,254 4,295 4,463 4,543 4,590 4,775 4,393 4,212 4,305 4,073

Revenues from environmentally related taxes Portugal

6

1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Duty on petrol 0.88 0.75 0.70 0.74 0.74 0.79 0.75 0.74 0.70 0.68 0.70 0.69 0.67

1.98

Excise duty on mineral oil (other than petrol) 0.52 0.51 0.46 0.50 0.51 0.52 0.50 0.52 0.52 0.53 0.59 0.61 0.61

Tax in connection with petroleum stocks 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.01 0.01 0.01 0.02 0.02 0.01

Fuel tax (Tax on coal) 0.19 0.15 0.11 0.11 0.12 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Energy Tax 0.00 0.42 0.53 0.43 0.43 0.60 0.72 0.75 0.58 0.68 0.72 0.72 0.68

Motor vehicle duty 0.74 0.70 0.65 0.62 0.64 0.68 0.70 0.71 0.72 0.76 0.85 0.88 0.86

1.21 Tax on passenger cars and motor bicycles 0.59 0.69 0.66 0.59 0.60 0.61 0.61 0.64 0.64 0.54 0.37 0.36 0.33

Tax on heavy lorries 0.01 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.02

Waste tax 0.03 0.05 0.04 0.04 0.02 0.02 0.02 0.04 0.03 0.02 0.01 0.01 0.00

0.53

Levy on water pollution 0.23 0.24 0.23 0.23 0.24 0.24 0.23 0.23 0.22 0.21 0.19 0.19 0.20

Tax on the pollution of surface waters 0.00 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00

Tax on groundwater extraction 0.04 0.04 0.04 0.03 0.04 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03

Tax on tap water 0.00 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Aviation noise tax 0.00 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01

Municipal sewerage charge 0.15 0.16 0.16 0.16 0.17 0.17 0.17 0.19 0.19 0.20 0.22 0.22 0.23

Hunting and shooting licence 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Packaging tax (Verpakkingenbelasting) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.05 0.05 0.05

# -- Minerals accounting system 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total 3.41 3.80 3.67 3.52 3.59 3.74 3.82 3.92 3.70 3.75 3.80 3.84 3.72

7

Revenues from environmentally related taxes Netherlands

Energy tax rates per GJ

8

TRANSPORT HEATING & PROCESS USE ELECTRICITY

Gas

olin

e (r

oad)

Die

sel (

road

)

LPG

& n

atur

al g

as (

prop

ella

nt)

Rai

l & m

arin

e fu

els

(dom

estic

)B

iofu

els

(roa

d)A

viat

ion

fuel

s (d

omes

tic)

Die

sel &

ker

osen

e (r

es.,

com

m.)

Die

sel &

ker

osen

e (in

d., a

g.)

[ET

S-P

]

Fue

l oil

(com

m.,

ind.

, ag.

)

LPG

(re

s., c

omm

., in

d.,

ag.)

Coa

l, fu

el o

il &

LP

G (

ET

S in

d. s

ecto

rs)

[ET

S-A

]

Nat

ural

gas

(re

s., c

omm

., in

d., a

g., f

ish)

[ET

S-P

]

Ren

ewab

les

& w

aste

(re

s., c

omm

., in

d.)

All

fuel

s us

ed fo

r en

ergy

tran

sf. [

ET

S-A

]

All

fuel

s us

ed to

gen

erat

e he

at [E

TS

-A]

Nat

ural

gas

(al

l use

s ex

cept

tran

spor

t) [E

TS

-A]

Oil

prod

ucts

(al

l use

s ex

cept

tran

spor

t) [E

TS

-A]

Coa

l (al

l use

s ex

cept

tran

spor

t) [E

TS

-A]

Bio

mas

s &

was

te (

all u

ses

exce

pt t

rans

port

) [E

TS

-A]

Ren

ewab

les

(all

uses

exc

ept

tran

spor

t) [E

TS

-A]

Tra

nspo

rt

0

2

4

6

8

10

12

14

16

18

20

0

2

4

6

8

10

12

14

16

18

20

0 150 000 300 000 450 000 600 000 750 000 900 000

Tax rate expressed in EUR per GJTax rate expressed in EUR per GJ

Tax base – energy use – expressed in TJ[ETS-A] = all subject to the ETS[ETS-P] = partially subject to the ETS

PRTTax Fuel tax credit or tax expenditure

Source: OECD (2013), Taxing Energy Use: A graphical Analysis

Energy tax rates per tonne CO2

9

TRANSPORT HEATING & PROCESS USE ELECTRICITY

Gas

olin

e (r

oad)

Die

sel (

road

)

LPG

& n

atur

al g

as (

prop

ella

nt)

Rai

l & m

arin

e fu

els

(dom

estic

)B

iofu

els

(roa

d)A

viat

ion

fuel

s (d

omes

tic)

Die

sel &

ker

osen

e (r

es.,

com

m.)

Die

sel &

ker

osen

e (in

d., a

g.)

[ET

S-P

]

Fue

l oil

(com

m.,

ind.

, ag.

)

LPG

(re

s., c

omm

., in

d.,

ag.)

Coa

l, fu

el o

il &

LP

G (

ET

S in

d. s

ecto

rs)

[ET

S-A

]

Nat

ural

gas

(re

s., c

omm

., in

d., a

g., f

ish)

[ET

S-P

]

Ren

ewab

les

& w

aste

(re

s., c

omm

., in

d.)

All

fuel

s us

ed fo

r en

ergy

tran

sf. [

ET

S-A

]

All

fuel

s us

ed to

gen

erat

e he

at [E

TS

-A]

Nat

ural

gas

(al

l use

s ex

cept

tran

spor

t) [E

TS

-A]

Oil

prod

ucts

(al

l use

s ex

cept

tran

spor

t) [E

TS

-A]

Coa

l (al

l use

s ex

cept

tran

spor

t) [E

TS

-A]

Bio

mas

s &

was

te (

all u

ses

exce

pt t

rans

port

) [E

TS

-A]

Tra

nspo

rt

0

50

100

150

200

250

0

50

100

150

200

250

0 25 000 50 000

Tax rate expressed in EUR per tonne of CO2Tax rate expressed in EUR per tonne of CO2

Tax base – energy use – expressed in thousands of tonnes of CO2[ETS-A] = all subject to the ETS[ETS-P] = partially subject to the ETS

PRTTax Fuel tax credit or tax expenditure ж Average 2010-11 ETS price

Source: OECD (2013), Taxing Energy Use: A graphical Analysis

Energy tax rates per tonne CO2

10

PRT

ESP

TUR

GRC ITA NLD

0

50

100

150

200

250

300

350

400

0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1

Effective tax rate (EUR per tonne CO2)

Fossil fuel support

11

Source: OECD (2013), Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels 2013

Company car taxation

A new OECD study investigates the current tax treatment of company

cars (and commuting expenses).

Builds on, and deepens, an earlier study by Copenhagen Economics.

Compares actual taxation of the benefit to the employee with a

common, hypothetical benchmark.

12 Harding (Forthcoming), Estimating the fiscal cost of company cars:

The tax treatment of company cars and commuting expenses in the OECD.

The amount of tax foregone as a proportion of the tax paid

under country systems ranges from 6% in Canada, to 509% in

Portugal.

The amount of tax foregone in each country can be used to

calculate the average subsidy for each company car per year.

The total annual subsidy per car is highest in Portugal, at

EUR 3,769 per year per car, and lowest in Canada, at EUR

143 per year per car.

A follow-up study indicates that – on average across the

OECD countries – the costs to society of the additional

environmental damage and other externalities due to the

current under-taxation of company car benefits are several

times larger than the revenue losses.

13

Company car taxation II

Harding (Forthcoming), Estimating the fiscal cost of company cars:

The tax treatment of company cars and commuting expenses in the OECD.

CO2-differentiation in vehicle purchase taxes Tax per petrol-driven vehicle, 01.01.2012

14

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

1 71 101 131 161 191 221 251 281

€p

er

ve

hic

le

gram CO2 emitted per km driven

Diesel-driven vehiclesAustria, 10 000€ Austria, 25 000€Belgium, Wallonia 10 000€ Belgium, Wallonia 25 000€Belgium, Other 10 000€ Belgium, Other 25 000€Canada DenmarkFinland, 10 000€ Finland, 25 000€France IsraelIreland, 10 000€ Ireland, 25 000€Netherlands NorwaySlovenia, 10 000€ Slovenia, 25 000€Spain, 10 000€ Spain, 25 000€Portugal UKUSA South Africa

15

CO2-differentiation in vehicle use taxes Tax per year for petrol-driven vehicles, 01.01.2012

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1 71 101 131 161 191 221 251 281

€p

er

ye

ar

gram CO2 emitted per km

Petrol-driven vehicles

Denmark FinlandFrance (general) France (company)Germany IrelandLuxembourg PortugalUK Sweden

16

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

51 81 111 141 171 201 231 261 291

€p

er

ton

ne C

O2

em

itte

d d

uri

ng

th

e v

eh

icle

's lif

eti

me

gram CO2 emitted per km

Petrol-driven vehicles

Austria, 10 000€ Austria, 25 000€Belgium, Wallonia 10 000€ Belgium, Wallonia 25 000€Belgium, Other 10 000€ Belgium, Other 25 000€Canada DenmarkFinland, 10 000€ Finland, 25 000€France IsraelIreland, 10 000€ Ireland, 25 000€Netherlands NorwaySlovenia, 10 000€ Slovenia, 25 000€Spain, 10 000€ Spain, 25 000€Portugal UKUSA South Africa

The calculations assumethat each vehicle is driven

200 000 km over its lifetime

CO2-differentiation in vehicle purchase taxes Tax per tonne CO2 emitted over the lifetime of petrol vehicles, 01.01.2012

17

CO2-differentiation in total vehicle taxes Tax per tonne CO2 emitted over the lifetime of diesel vehicles, 01.01.2012

-600

-400

-200

0

200

400

600

800

1,000

€p

er

ton

ne

CO

2 e

mit

ted

ove

r th

e v

eh

icle

life

tim

e 100 gram CO2 per km

-600

-400

-200

0

200

400

600

800

1,000

€p

er

ton

ne

CO

2e

mit

ted

ove

r th

e v

eh

icle

life

tim

e 150 gram CO2 per km

-600

-400

-200

0

200

400

600

800

1,000

€p

er

ton

ne

CO

2 e

mit

ted

ove

r th

e v

eh

icle

life

tim

e 200 gram CO2 per km

-600

-400

-200

0

200

400

600

800

1,000

€p

er

ton

ne

CO

2e

mit

ted

ove

r th

e v

eh

icle

life

tim

e 250 gram CO2 per km

One-off Recurrent

Further information

www.oecd.org/env/policies/database

www.oecd.org/env/taxes

http://www2.oecd.org/ecoinst/queries/MotorVehi

cleCO2.htm

Nils-Axel.Braathen@oecd.org

18