A new study prepared by the European Commission and Eurostat has graphically demonstrated the continuing wide gap between EU policy and practice in environmental taxation. According to a detailed analysis of the structure of EU member state tax systems from 1970 to 1995, environmental taxes in the EU in 1995 made up just 1.7% of all EU taxation, or 0.7% of gross domestic product (GDP). Both figures have barely changed over the last 25 years. In contrast, taxes on labour grew from 14.5% of GDP in 1970 to 21.4% in 1995, accounting for a record 51.4% of all taxation in the latter year. The trend runs counter to a growing body of official EU policies, which now support both an increase in the use of economic instruments for environmental policy goals and a reduction in labour taxation to help reduce unemployment. Think tanks in several EU countries have put the two arguments together and advocate an "ecological shift" in taxation from "goods" to "bads". The statistics paint a different picture.
European Commission, tel: +32 2 295 1111; Eurostat, tel: +352 4301 33496. References: "Structures of the Taxation Systems of the European Union 1970-95."
Not a subscriber?
Take a free trial now to discover the critical insights and updates our coverage offers subscribers.