(unit: EUR per kilolitre and PPS EUR per kilolitre)
Unleaded Unleaded
petrol petrol PPS Diesel Diesel PPS Country EUR/kl Country EUR/kl Country EUR/kl Country EUR/kl
Romania 204 Luxembourg 321 Romania 112 Luxembourg 234
Latvia 211 Switzerland 365 Lithuania 129 Lithuania 258
Estonia 224 Ireland 366 Bulgaria 135 Austria 275
Lithuania 243 Austria 397 Estonia 166 Denmark 284
Bulgaria 267 Latvia 424 Latvia 198 Finland 296
Slovakia 268 Greece 425 Slovakia 209 Belgium 301
Czech Rep. 304 Denmark 426 Czech Rep. 229 Sweden 308
Poland 314 Sweden 437 Poland 237 Ireland 318
Greece 321 Spain 442 Portugal 246 Spain 321
Luxembourg 347 Lithuania 484 Greece 247 Greece 326
Portugal 349 Estonia 502 Luxembourg 253 France 351
Hungary 358 Portugal 508 Spain 270 Portugal 358
Slovenia 369 Finland 510 Austria 283 Germany 361
Spain 372 Belgium 512 Belgium 290 Netherlands 362
Ireland 374 Norway 517 Slovenia 290 Estonia 372
Austria 408 Germany 537 Hungary 308 Romania 381
Switzerland 467 France 561 Ireland 325 Switzerland 381
Belgium 494 Slovenia 604 Finland 325 Latvia 399
Denmark 519 Italy 614 Denmark 346 Norway 412
Sweden 529 Netherlands 617 Netherlands 347 Italy 457
Italy 542 Poland 619 France 367 Bulgaria 459
Finland 561 Romania 692 Sweden 373 Poland 467
Germany 562 UK 728 Germany 378 Slovenia 475
France 586 Slovakia 749 Italy 403 Czech Rep. 576
Netherlands 592 Czech Rep. 766 Switzerland 487 Slovakia 583
Norway 651 Hungary 845 Norway 519 UK 713
UK 801 Bulgaria 908 UK 785 Hungary 729
Source: Tax rates: Annex 1 and EC 2000a; exchange rates and PPS: Eurostat New Cronos database.
it should also be mentioned that subsidies still play a role in the region. For example, while prices have been increased in past years, the use of electricity and natural gas in households is still subsidized in Hungary (Zalatnay, 2000).
The comparison between CEECs aiming to join the EU and cohesion countries, again, shows some similarities. Ireland and Greece have not levied any taxes on energy products other than mineral oil products, i.e. the consumption of coal, natural gas and electricity is not taxed at all. The consumption of electricity is taxed in Portugal, and Spain has imposed taxes on the use of natural gas and electricity. It should also be noted that there are no minimum excise tax rates introduced on the EU level for the three energy products in question. Several EU member states have no taxes on these energy products, particularly not on coal, which is still heavily subsidized in countries such as Germany. However, the European Commission put forward a proposal for a Directive for the harmonization of excise taxes in 1997, plan-ning to introduce minimum rates for coal, natural gas and electricity (EC 1997). The imple-mentation of this Directive is, however, still under discussion.
Revenues generated from taxes on energy products other than motor fuels are very small in CEECs, because not many countries have implemented such economic instruments. This sit-uation is comparable to the development in OECD countries, where revenues raised on tax bases such as heavy fuel oil, coal and coke are very small (Braathen 2000). One of the reasons for such a situation is that the main user of these energy products, namely the industrial sector, is either exempt from paying taxes, or is granted generous tax relief (Elkins and Speck 1999).
4.5 CONCLUSIONS
The overview of taxes and charges levied on energy products in CEECs shows that the traditional motor fuels are subject to environmental taxation. These taxes are substantial in many of the EU applicant countries and have been increased throughout the region over recent years. Taxes on fuels other than petrol and diesel are less common. In recent years, however, the system of taxation has been extended to mineral oil products used for heating purposes or for industrial/commercial purposes, and countries are beginning to comply with EU minimum rates. Another interesting result of this overview is the fact that Albania and FYR Macedonia implemented rather high taxes on motor fuels.
When considered in terms of purchasing power standards, many CEECs have levied some of the highest taxes on motor fuels in Europe. However, further increases in tax rates seem to be necessary for some of the candidate countries. Based on these conclusions, the issues of affordability and social exclusion have been highlighted.
5.1 SULPHUR DIOXIDE, NITROGEN OXIDES AND OTHER AIR POLLUTION CHARGES
Countries in Central and Eastern Europe have previous experience with emission charges, as pollution charges and non-compliance fees were introduced in many countries as early as the 1970s. While serving no economic function per se during this period, these charges were modified during transition to a market-based economy in many countries. As subsidies for operating costs were reduced and enterprises began to face real financial con-straints, pollution charges emerged as real costs to producers and consumers. The value of environmental charges was also apparent to environmental policymakers, who recognised the need for investment revenues in the environmental sector.
The development and implementation of air pollution charges, the primary pollutants being SO2, NOxand solid particles, varies both in comprehensiveness and success through-out the region. On a regional basis, more attention has been given to the revenue-raising function of economic instruments than to their ability to provide incentives for pollution reduction. This can be attributed to budgetary pressures, which have severely restricted pub-lic financing of environmental investments in most countries (see Chapters 3 and 10 for more information). Moreover, experience had been accrued within environmental ministries regarding these types of charges, and, as industry and municipalities recognise the potential environment-related financial support from earmarked funds, these charges can become more politically attractive. For this reason, economic instruments have now become the main revenue source for state and regional/municipal environmental funds that exist in most countries in the region (OECD 1999b). In the Czech Republic for example, air emission charges and fines accounted for 26 percent of total revenue of the national environmental fund in 1999, and for 33 percent in Slovakia (REC 2001 forthcoming). The revenues generat-ed in this way comprise a large part of environmental expenditures in Poland, which reachgenerat-ed 1.6 percent of GDP in 1997 and 1998.23
The scheme implemented in CEECs differs from many schemes in Western Europe in the sense that emission charges have been introduced in conjunction with a permit system: a base charge rate is applied to all pollution within the permitted level and a penalty rate is added for pollution exceeding that level (the so-called non-compliance fee). Large point-source polluters (combustion plants, heavy industry) are the primary subjects of these instru-ments. The charges are intended to raise revenues and encourage cost-effective abatement measures, to keep pollution below the permitted level. The fines (non-compliance fees) are intended to provide incentives to reduce pollution to permitted levels and therefore play a compliance and incentive function. Such a system is in place in the Czech Republic, Estonia, Latvia, Lithuania, Poland, and Slovakia (Table 5.1).24The Czech Republic also levies emission charges on small-scale, non-household air polluters, depending on the power of the com-bustion plant and the type of fuel used (revenue of the municipal budget). Croatia, Romania and Yugoslavia have no emission charges, but apply non-compliance fees when air-emission legislation is violated. Albania, Bosnia and Herzegovina and Slovenia have not introduced any EIs on emissions such as SO2and NOx.
As already mentioned in the previous section, the revenues from these charges and fines are largely earmarked for expenditure through national and regional/local environmental funds (examples include the Czech Republic, Poland, Slovakia, Latvia, Lithuania and Bulgaria). In Estonia, revenues form air emission charges and non-compliance fees are ear-marked for environmental expenditure within the central budget, while Croatian and
5. Air Pollution Charges/Taxes
TABLE 5.1