Environmental taxes get German election boost

Red/Green victory gives Greens their first taste of national power in Germany

Greater use of environmental taxation has been placed firmly on the German and EU political agenda following the SPD's victory in Sunday's elections and its decision to form a "Red/Green" coalition with the small Green Party.

Both parties are committed to an "ecological tax reform," which implies not only increasing taxes on environmental "bads," such as fossil fuels, but making corresponding cuts in taxes on "goods" such as employment. The remaining doubt as the two parties begin policy negotiations, is how far the Greens' radical ecotax agenda will be adopted in the new government's programme.

Even without involvement of the Greens in the government, the SPD's victory would have meant a greater focus on environmental taxes. The outgoing centre-right CDU/CSU coalition was opposed, for example, to raising German fuel taxes without first agreeing an EU framework (ENDS Daily 28 April). The centre-left SPD position is that tax rises should be introduced anyway.

In a first indication of what might be proposed by the new government, an SPD spokesperson told ENDS Daily that the party wanted to increase energy taxes and introduce five-yearly reviews. Possible targets could be an annual DM0.1 (Ecu0.05) per litre rise in petrol prices for five years, and one-off increases of 1.7 pfennigs per kW/hr in electricity prices and 0.8 pfennigs per litre for fuel oil.

The Greens would like to go further and faster on environmental taxation in general and energy taxes in particular. However, it is not yet known what they will push for in negotiations with the SPD. Earlier this year, the party called for petrol prices to be tripled over 10 years from the current DM1.50 per litre, but then withdrew after losing votes in regional elections (ENDS Daily 1 April).

The Red/Green coalition is likely to give environmental taxation a greater profile at EU level as well, as Germany prepares to assume the EU presidency for six months in January. An SPD spokesperson confirmed that Germany would put environmental taxation on the EU agenda when it takes over from Austria. "We want to play a leading role," he added.

Nuclear power's future in Germany is also likely to be affected by the election outcome. Both the new coalition partners are more hostile to nuclear energy than was the CDU/CSU. The Green Party's position is that there should be a total phase-out within 10 years, while the SPD talks more vaguely about ending reliance on nuclear power.

On the political front, the new coalition marks the first time that the Greens have achieved national power in Germany, though the party already governs several German states in coalition with the SPD. The victory means that Green parties will "have a say" in one third of European governments, according to an ecstatic Green Group in the European Parliament.

Follow Up:
SPD, tel: +49 228 5321; Green Party, tel:+49 228 916 6134.

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