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.