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Belgium Falls Short On Dissuasive Environmental Taxes

by Ulrika Lomas, Tax-News.com, Brussels

12 February 2013


Belgium has one of the lowest environmental tax burdens in Europe, according to a recent study on the latest developments in the area of environmental taxation conducted by Eurostat, the statistical office of the European Union (EU).

Indeed, Eurostat reported that environmental taxes collected in Belgium amounted to below 5% of the country’s total taxes and social contributions (TSC), compared to 10% in the Netherlands.

Eurostat figures reveal that in 2010, environmental taxes yielded around EUR7.3bn (USD9.8bn) for the Belgian Government, of which approximately EUR4.7bn was derived from energy taxes levied on petroleum products, for example electricity, natural gas, carbon, and carbon dioxide (representing 64% of the total). Some EUR2.08bn flowed from transport taxes imposed on motorized vehicles (accounting for 28% of the total), and EUR0.53bn was collected from pollution and resource taxes, including levies on mining extraction, water and air pollution, noise and refuse (7% of the total).

In contrast, the Netherlands recorded a particularly high level of income from environmental taxes, totaling EUR23.53bn in 2010, namely three times as much as Belgium, of which EUR12bn was derived from taxes on energy, EUR7bn from transport taxes, and EUR4bn from taxes on pollution.

Commenting, the Belgian federation representing environmental organizations in the Wallonia region (Fédération Inter-Environnement Wallonie) underlined the need to radically revise the country’s energy tax policy, given the latest Eurostat data. Alluding to the relative low levels of energy taxation in Belgium, the organization called for the introduction of a carbon tax on non-renewable energy (including nuclear) and for the withdrawal of subsidies awarded to this sector.

Eurostat’s report highlights the latest developments of four different types of environmental taxes (energy, transport, pollution and resource taxes) in the EU.

According to Eurostat, the EU-27 raised around EUR292bn from environmental taxes corresponding to 2.4% of gross domestic product (GDP) and 6.2% of taxes and social contributions in 2010.

Eurostat revealed that a vast majority of European countries showed levels of environmental tax revenue in a band ranging from 6% to 10% of TSC in 2010.

Only in Bulgaria and the Netherlands did more than 10% of TSC come from environmental taxes.

In Germany, Austria, Spain, Iceland, Belgium and France less than 6% of TSC was raised from environmental taxes. The EU-27 average was 6.2 %.

When comparing the environmental tax revenue to GDP, most of the countries are in a range between 2% and 3% of GDP, Eurostat said, noting that Denmark, the Netherlands and Slovenia have far higher ratios, with environmental tax revenue totaling between 3.6% and 4% of GDP.

Slovakia, Iceland, France, Lithuania and Spain are the only five countries where environmental taxes are less than 2% of GDP.

Many of the eastern European countries and Luxembourg raise 85% or more of their environmental tax revenue from energy taxes.

This is due to the higher energy intensity of eastern European economies when compared with the EU-15, resulting in a larger tax base. In Luxembourg, the high share for energy taxes is due to the high volume of road fuels sold in the country to non-residents, which increases the tax base for energy taxes compared with the other European countries.

At the other end of the scale, in Malta and Norway transportation taxes were almost as significant as energy taxes.

The Netherlands, Iceland and Estonia were the only countries in which pollution and resource taxes accounted for more than 10% of total environmental tax revenue.

TAGS: environment | tax | Belgium | Denmark | Iceland | Malta | Netherlands | Slovenia | mining | energy | gross domestic product (GDP) | Bulgaria | Estonia | Luxembourg | Norway | Slovakia | environmental tax | Austria | France | Germany | Spain | European Union (EU) | Lithuania | Europe

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