ECO-TAX STRUGGLES TO GAIN TRACTION

Planned levy on polluting products have sparked protests in France, Germany, other EU countries

TAXES on products considered polluting are struggling to gain ground in the European Union (EU) despite backing from Brussels, in the face of strong opposition from movements like France’s “Yellow Vests”.

In 2011 the European Commission envisaged that by “2020 a major shift from taxation of labour towards environmental taxation... will lead to a substantial increase in the share of environmental taxes in public revenues”.

So far this has not come to pass. Since then the share of environmental tax revenues in the EU, which stood at 6.18 per cent, has fallen almost every year.

Nonetheless, eco-taxes in 2017 generated around €369 billion (RM1.69 trillion).

Latvia leads the bloc in implementing eco-taxes, making up some 11.11 per cent of its fiscal revenue in 2017, according to data from EU statistics authority Eurostat.

Slovenia and Greece also top the list, generating respectively 10.13 and 9.5 per cent of their revenue from eco-taxes, well above the EU country average of 5.97 per cent.

By contrast, Luxembourg brings in the least revenue from eco-taxes with 4.25 per cent, while Germany (4.46 per cent), Belgium (4.74 per cent), France (4.77 per cent) and Sweden (4.8 per cent) do not fare much better.

Eco-taxes in Germany are based on reforms passed in 19992000. Germans now pay a tax on electricity of 6.41 cents per kilowatt hour that directly finances renewable energy infrastructure.

In Hungary, meanwhile, an ecotax is automatically charged through VAT on products that generate waste such as plastic bags, batteries, leaflets and packaging.

Bulgaria also charges eco-taxes on vehicle registration, ranging from €64 to €158 depending on the age of the car. This does not apply to electric cars.

Greeks have paid for plastic bags in supermarkets since January in a well-received measure, with experts noting a “significant” reduction in the number of bags used.

The government said the revenue collected will be used in the recycling sector.

Energy in Latvia is heavily taxed: up to €509 per 1,000 litres for fuel oil, while coal is so highly taxed that it is virtually impossible to open a coal power plant. Tax on natural gas, however, is lower.

The French “yellow vest” protests are the latest expression of opposition to eco-taxing, sparked by a proposed fuel tax hike that led to widespread demonstrations and road blockages in late last year.

After three weeks of protests, the government scrapped the fuel tax set to be introduced in January this year, but protests have continued.