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Environmental tax statistics


Data extracted in January 2020

Planned article update: February 2021

Highlights

In 2018, total environmental tax revenue in the EU amounted to €324.6 billion, representing 2.4% of EU GDP and 6.0% of total EU government revenue from taxes and social contributions.

Taxes on energy in the EU accounted for more than three-quarters of the total revenues from environmental taxes (77.7% of the total) in 2018, well ahead of taxes on transport (19.1%) and pollution and resources (3.3%)

Environmental tax revenue by type and total environmental taxes as share of TSC and GDP, EU-27, 2002-2018
(billion EUR, %)
Source: Eurostat (env_ac_tax)

This article provides an overview of environmental taxes in the European Union (EU). According to Regulation (EU) N° 691/2011 on European environmental economic accounts, an environmental tax is a tax whose tax base is a physical unit (or a proxy of it) of something that has a proven, specific negative impact on the environment and which is defined in the European system of accounts (ESA 2010) as a tax. European statistics distinguish four different categories of environmental taxes relating to energy, transport, pollution and resources. For more detailed information, see Environmental_tax_statistics - detailed analysis[1].


Full article

Environmental taxes in the EU

In 2018, the governments in the EU collected environmental tax revenue of EUR 324.6 billion. The value represents 2.4 % of the EU gross domestic product (GDP) and 6.0 % of the EU total government revenue from taxes and social contributions (‘TSC’)[2] (see Table 1).

Table 1 presents the breakdown of environmental tax revenue by type of tax and payer.

A very large portion of the 2018 EU environmental tax revenue – 77.7 % - comes from energy taxes. The share of transport taxes is 19.1 %, and the share of taxes on pollution and resources is still very small in the EU (3.3 %).

For the latest available year 2017, the tax burden varies by environmental tax category. While households and corporations pay a nearly equal share of energy taxes (49.1 % and 48.1 % respectively), households are the main payer of transport taxes (accounting for almost two thirds of the total at 66.7 %), and they pay a larger portion of pollution and resource taxes (55.7 %). Residents pay a very large majority of the environmental taxes, with a relatively small share (below 2.5 %) payable by non-residents.

Table 1: Total environmental tax revenue by type of tax and tax payer, EU-27, 2018
Source: Eurostat (env_ac_tax)

Since 2002, the environmental tax revenue’s share in total government revenue from taxes and social contributions has slightly decreased

The 2018 value of the EU environmental taxes was around EUR 107 billion higher than in 2002 (see Figure 1). Relative to GDP, its level has, however, slightly decreased (from 2.5 to 2.4 % of GDP). Over the same period, the share of the environmental taxes in TSC dropped by 0.6 percentage points, from 6.6 % in 2002 to 6.0 % in 2018.

Still, the evolution of the environmental tax revenue relative to GDP and TSC seems to have changed its pattern in 2008, and again in 2016. After five years of consecutive decrease, it started to increase in 2009 (presumably due to the economic recession and drop in both nominal GDP and government revenue, as a result of the financial crisis) and it remained relatively stable thereafter. Starting from 2016, the ratios have been slowly falling again.

Figure 1: Total environmental tax revenue by type and total environmental taxes as share of TSC and GDP, EU-27, 2002–18
(billion EUR)
Source: Eurostat (env_ac_tax)

Environmental tax revenue varies across the EU Member States, but energy taxes remain its main source in most of the countries

Figure 2 shows the 2018 environmental tax revenue by country both as a percentage of GDP and of TSC, presenting for the latter also the split by type of tax.

Across the EU, the environmental tax revenue-to-GDP ratios ranged in 2018 from 1.6 % (Ireland) to 3.7 % (Greece). The share of environmental taxes in TSC also varied significantly across the EU Member States, with Latvia reporting the largest share (at 10.9 %). At the opposite end of the scale, Luxembourg (4.4 %) had the lowest share of environmental taxes in TSC in the EU.

Taxes on energy accounted for over half of the environmental tax revenue in all EU Member States in 2018, being by far the largest source of environmental taxes in Czechia, Romania, Luxembourg and Lithuania (with more than 90 %-share of the total environmental tax revenue).

Transport taxes were the second-largest component of the environmental tax revenue for all EU Member States but Estonia and Lithuania. The contribution of transport taxes to the total was particularly high in Denmark and Malta.

Pollution and resource taxes account for a very small portion of the environmental tax revenue. They group a variety of taxes, levied e.g. on waste, water pollution and abstraction. In many European countries, such taxes were introduced later than energy or transport taxes and only marginal values of this category of taxes are reported up to now. As yet, no taxes of this category have been levied in Germany. The Netherlands, Hungary and Estonia stand out, recording shares of pollution and resource taxes that, albeit small, are larger than in other EU Member States .

The breakdown of the environmental tax revenue by category is also available for the United Kingdom and two EFTA countries. For details, see Figure 2.

Figure 2: Environmental tax revenue by category as % of TSC and GDP, 2018
(%)
Source: Eurostat (env_ac_tax)

Between 2017 and 2018, environmental tax revenue dropped as % of GDP and a share of TSC in a majority of EU Member States

Most of the EU Member States recorded a lower share of environmental tax revenue in TSC in 2018, although for the majority the drop remained below 0.4 percentage points. Larger decreases were observed in Greece and Ireland (both -0.8 percentage points), for which the revenue decreased also in absolute terms. Only in seven EU Member States did the share increase, and only in France, Czechia and Lithuania did it grow by over 0.1 percentage points.

Although the changes in the environmental tax revenue-to-GDP ratios between 2017 and 2018 are not quite as significant, differences can be noted between Member States. Some countries kept or slightly increased their 2017 environmental tax revenue-to-GDP ratio, but for the majority of countries, the ratio decreased in 2018, with the largest decrease recorded in Greece (-0.28 percentage points) and Slovenia (-0.21 ppt).

Figure 3: Environmental tax revenue - Percentage point change between 2017 and 2018
(%)
Source: Eurostat (env_ac_tax)

Environmental taxes by payer

Resident households and corporations have nearly equal contributions in the energy tax revenue

For the latest available year 2017 (detailed data by tax payer becomes available later than data on the total revenue), EU households paid almost half (49 %) of all energy tax revenue collected by governments in 2017. The contribution of businesses, mainly from the services and manufacturing industries, was nearly identical (48 %). The remainder (3 %) relates to the amounts payable by non-residents or that could not be allocated to a specific group of payers.

Among the EU Member States, Luxembourg stands out with the largest share of the energy tax revenue (60 %) collected from non-residents, largely due to non-resident purchases of petrol and diesel. In Malta, this share is also substantial (47 %).

In 2017, households paid over 60 % of total energy taxes in Slovenia (65 %) and Cyprus (63 %) (see Figure 4).

The services industries (including transportation and trade) accounted for 27 % of the EU energy tax revenue, with Croatia, Slovakia, Poland, Czechia and Ireland recording the shares of over 40 %. Industry, construction and utilities generated over 18 % of the EU energy tax revenue.

Figure 4: Energy taxes by economic activity, 2017
(%)
Source: Eurostat (env_ac_taxind2)

Households pay over two thirds of the EU transport taxes

On average, transport taxes paid by households accounted in 2017 for a larger share (67 %) of the EU transport taxes than those paid by the business sector (33 %) (see Figure 5). This is because households are the main payer of the motor vehicle tax revenue (an important component of transport tax revenue) in the EU.

However, in some Member States the structure of transport tax revenue by payer differs considerably from the EU average, e.g. households contribute only marginally to transport tax revenue in Slovakia and in Czechia (both below 1 %).

Figure 5: Transport taxes by economic activity, 2017
(%)
Source: Eurostat (env_ac_taxind2)

Implicit tax rate on energy

The implicit tax rate on energy is defined as the ratio of energy tax revenue to final energy consumption calculated for a calendar year. Energy tax revenues are measured at constant price euros (deflated with the implicit GDP deflator, prices of year 2010) and final energy consumption is measured in tonnes of oil equivalent (toe); as such the implicit tax rate on energy is expressed in terms of euros per tonne of oil equivalent (EUR per toe). The implicit tax rate on energy is not influenced by the size of the tax base and provides a measure of the effective average level of energy taxation. It is a very broad indicator, capturing information on a variety of energy products with different tax rates.

From 2006 to 2018, the implicit tax rate on energy grew by 22 % in real terms (in other words, after deflating the energy tax revenue), changing from EUR 201.3 per toe to EUR 245.7 per toe (at 2010 prices). Between 2006 and 2008, the implicit tax rate on energy decreased. From 2008 to 2014, overall, strong annual increases were observed (except in 2010). From 2014 to 2017, the trend remained rather stable and continued on an upward path again in 2018.

Figure 6: Implicit tax rate on energy
(deflated), EU-27, 2006–18
(EUR per tonne of oil equivalent)
Source: Eurostat (ten00120)

Source data for tables and graphs

Data sources

Using Table 9 from the ESA transmission programme, Eurostat gathers data on environmental taxes for four categories - energy, transport, pollution/resource taxes; the data are then validated and published.

Eurostat also collects data on environmental taxes at a more detailed level, by economic activity, under Regulation (EU) N° 691/2011 on European environmental economic accounts. The Eurostat publication titled ‘Environmental taxes — a statistical guide’ constitutes the methodological basis for this data collection.

Data relating to environmental taxes can be used to analyse the revenue stream from such taxes and to provide a relative measure of the importance of these taxes through the calculation of ratios relative to GDP or to the total revenue from all taxes and social contributions. In the first case (ratio relative to GDP), the comparison helps to provide an understanding of the tax burden. In the second case, the comparison helps to assess whether or not there is a shift towards environmental taxes, in other words, shifting the tax burden from other tax bases (for example, labour income) towards environmental taxes. It has to be noted that the total revenue of taxes and social contributions used to compute the ratio does not include imputed social contributions. For further information concerning various tax aggregates, see 'Main national accounts tax aggregates'.

Environmental tax revenue can also be allocated according to the different economic activities paying the taxes. Eurostat collects data on environmental taxes using a categorisation by economic activity (based on the NACE Rev. 2 classification supplemented by information for households, non-residents and a residual category for taxes that could not be allocated).

Increasing revenue from environmental taxes should be interpreted with caution. The increases may be caused by the introduction of new taxes or an increase in tax rates, or alternatively may be linked to an increase in the tax base caused, for instance, by a higher consumption of energy products.

Context

Economic instruments for pollution control and natural resource management are an important part of environmental policy in the EU Member States. The range of instruments that are available includes, among others, environmental taxes, fees and charges, tradable permits, deposit-refund systems and subsidies.

Environmental taxes are used to influence the behaviour of economic operators, whether producers or consumers. The EU has progressively favoured these instruments because they provide a flexible and cost-effective means for reinforcing the polluter-pays principle and for reaching environmental policy objectives. The use of economic tools for the benefit of the environment is promoted in the EU Environment Action Programme to 2020, the EU sustainable development goals and the Europe 2020 strategy.

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Notes

  1. update pending
  2. excluding imputed social contributions