Environmental Taxes in Denmark

Deepankar KapoorMBM 2011-13Department of Business Management, University of Calcutta

Denmark

• Scandinavian country in North

Europe

• Constitutional Monarchy with a

parliamentary system of

government

• Member of EU since 1973

• Mixed market capitalist economy

• Ranks as the World’s highest

level of income quality

Environment Taxes – 3 General Groups

Finer Details

Taxes on Motor Fuels

shown in terms of the highest tax rates by setting the tax rate applied in the UK equals 100

CO2 and SO2 Taxes

Air Pollution and Transport Taxes – Annual Motor Vehicle Tax (AMVT)

Water Related Taxes & Charges

• Water services, like provision of drinking water and wastewater treatment, are subject to VAT.

• But the VAT rates applied in the different countries differ in the sense that some countries levy the standard VAT rate on the user charges (for example, Sweden, Denmark and Finland) compared to a reduced VAT rate in other countries like Belgium, Germany and France.

• The tax is levied on water delivery of up to a maximum of 300 m3 per connection per year and the aim of the tax is to give a price signal for water saving.

• Denmark has implemented this type of tax so far, in 1994, with only households subject to the tax payment.

Waste Taxes

• Different types of wastes can be

subject to varied tax rates (Austria

and Switzerland) and the rates can

also depend on the type of waste

disposal.

• In Denmark the tax rates for waste

delivered to an incinerator depend on

energy recovery.

• Waste Management Policy assesses

landfilling as the least desired option and prefers waste

recycling compared to incineration which is seen as the second

least desired option, by considering the incentive effect of a

tax: the recyclable stream of waste is subject to a tax rate of

zero, incineration of waste is subject to a tax rate of more than

6.2 EUR /tonne.

Other Eco Taxes

Taxes/ charges

Country and

Revenue use

Country and Revenue Use

Country and Revenue Use

1) NOX taxes and charges

SRefunded to firms on basis of production of useful energy

E Fund for environmental restoration (5% of revenues) – remainder to general budget

FAbatement (66%) and monitoring (17%) equipment and R&D (10%)

2) Water abstraction charges

NLGeneral budget

DKGeneral budget

ERecovery of costs of water infrastructure

3) Waste Water Charges

DKGeneral budget, though a substantial sum was devoted to an independent Water Fund, to finance projects which protect groundwater resources

NLHypothecated for identification and funding of investments in sewage treatment plants

DRecycled for investments in sewage treatment plants

4) Pesticides Taxes and Charges

SGeneral budget

DKInitially 55% of revenues were used to reduce county land tax, and around 10% was channelled back to farmers via support to organic farming. The remaining 35% of the revenue was used on research and on monitoring of pesticides in the environment

BEco-tax: state budgetNew pesticides charge:Used to fund registrations etc.

5) Mineral Surpluses and Fertiliser

NLGeneral budget

FINExport subsidies

SEnvironmental charge: research and environmentally related projects. Since 1994: state budget, but earmarked for environmental improvements in agriculture.

6) Landfill taxes

FRecycled to municipalities via funds/ investments and to a lesser extent, private (waste) sector & research activities

Tax credits used to support environmental projects

A Clean-up of contaminated sites and recycling to landfill sites for environmental investments

7) Aggregates Tax

DKGeneral budget

SGeneral budget New sustainability fund

8) Packaging Taxes

FIN National Exchequer

DKNational Exchequer

S National Exchequer

9) Batteries Taxes

IRevenue used to finance collection of batteries

BNo information given

HUEnvironmental protection.

Source: ECOTEC 2000A – Austria, B – Belgium,

DM – Denmark, FN – Finland,

NL – the Netherlands, NO – Norway, SW – Sweden,

SL – Switzerland, UK – the United Kingdom

Revenues from environmentally related taxes in per cent of GDP

0

1

2

3

4

5

6

Austri

a

Belgium

Czech

Rep

ublic

Denm

ark

Finlan

d

Franc

e

Ger

man

y

Gre

ece

Hunga

ry

Irelan

dIta

ly

Nethe

rland

s

Norway

Poland

Portu

gal

Spain

Sweden

Switzer

alnd UK

Per

cen

t o

f G

DP

1995

1997

1999

Source: OECD, Environmentally related taxes database

Revenues from environmentally related taxes in per cent of total tax revenue

0

2

4

6

8

10

12

14

Austri

a

Belgi

um

Czech

Rep

ublic

Denm

ark

Finl

and

Fran

ce

Germ

any

Greec

e

Hunga

ry

Irela

nd Italy

Nethe

rland

s

Norway

Polan

d

Portu

gal

Spain

Sweden

Switzer

alnd UK

Per

cen

t o

f to

tal t

ax r

even

ue

1995

1997

1999

Source: OECD, Environmentally related taxes database

Revenues from environmentally related taxes per capita

0

200

400

600

800

1000

1200

1400

1600

1800

Austri

a

Belgium

Czech

Rep

ublic

Denm

ark

Finlan

d

Franc

e

Ger

man

y

Gre

ece

Hunga

ry

Irelan

dIta

ly

Nethe

rland

s

Norway

Poland

Portu

gal

Spain

Sweden

Switzer

alnd UK

$US

1995

1997

1999

Source: OECD, Environmentally related taxes database

COUNTRY TAX SHIFT REVENUE SHIFTED

FROM TO % OF TOTAL TAX REVENUE

OR TAX REVENUE

Denmark 1993, 1995 and 19982

Personal Income, Employers’ Social Security Contributions, Investment Incentives

Various (electricity, water, waste, cars), CO2 and SO2

2.5(2.4 bil DKR; 340 mil EUR in 2000)

Tax Shift in Denmark

Sources: Recent Trends in the Application of Economic Instruments in EU Member States plus Norway and Switzerland, S. Speck, P. Ekins, Forum for the Future, London, July 2000

Thank YouBibliography:‘ENVIRONMENTAL TAXATION: THE EUROPEAN EXPERIENCE’ by Agnieszka Laskowska and Frank Scrimgeour, Department of Economics, University of Waikato.