critical issues in environmental taxation · 2008-05-05 · the environmental protection agency...

CRITICALISSUES IN

ENVIRONMENTALTAXATION

International and Comparative Perspectives:Volume V

Edited by

NATHALIE J CHALIFOUR

JANET E MILNE

H O P E ASHIABOR

KURT DEKETELAERE

LARRY KREISER

OXPORDUNIVERSITY PRESS

CONTENTS

Table of Cases xliiiTable of Legislation xlvTable of Treaties and Conventions li

I THE CONTEXT

1. Restructuring Taxes to Sustain our Twenty-First Century Civilization

A. Learning from China 1.08

B. Learning from the Past 1.19

C. Food and Fuel Compete for Land 1.30

D. Harnessing the Wind 1.46

E. Hybrid Cars and Wind Power 1.66

F. Cutting Carbon Emissions Fast 1JA

G. Getting the Price Right 1.88

H. A Wartime Mobilization 1.99

I. Plan B—A Plan of Hope 1.108

II MOVING FROM THEORY TO P R A C T I C E -IMPLEMENTATION OF ENVIRONMENTAL TAXES AND

OTHER ECONOMIC INSTRUMENTS

Political Acceptability

2. Some Quasi-behavioural Arguments for Environmental Taxation

A. Traditional Economic Arguments 2.07

B. Environmental Taxation and Decentralized TradingProgrammes 2.12

C. Opposition to Environmental Taxes 2.15

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D. Some Quasi-behavioural Arguments 2.18

Inducing innovation by engaging the entrepreneurialenergies of the firm 2.19

Some anecdotal evidence 2.23A red herring 2.27Narrowing options 2.29

Reducing perverse incentives to preserve polluting capital 2.35Public discourse effects 2.44

E. Conclusion 2.51

3. Gradual Introduction of Coercive Instruments in Climate Policy

A. Introduction 3.01

B. Background MaterialThe level of CO2 emissionsThe evolution of energy consumption and CO2 emissionsSwiss climate policy: a mixed bag

C. The Making of the CO2 Law

The 1994 projectThe 1997 project and 1999 CO2 LawAssessment

D. Setting up Voluntary Approaches

Declarations of self-regulationAssessment

E. Reneging the CO2 Law Commitment

Forecasts of CO2 emissions: will the targets be met?The 'climate penny' was pulled out of a hatWill there be a CO2 tax on heating and process fuel?

F. Concluding Assessment

The unravelling of a good approachLessons to be learned

3.063.083.123.15

3.21

3.22

3.253.30

3.31

3.323.39

3.44

3.443.493.55

3.58

3.583.61

References , 72

Competitiveness

4. Environmental Tax Reform in Europe: Energy Tax Rates andCompetitiveness


B. Competitiveness and Environmental Taxes 4.05

C. ETRs in Europe 4.13

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IntroductionETR in Europe: environmental taxes, labour taxes, and exemptionsETR in individual countries

DenmarkFinland >GermanyThe NetherlandsSwedenThe United Kingdom

Conclusion

D. Evolution of Energy Tax Rates

E. Evolution of Energy Prices

F. Conclusion

4.134.214.304.304.384.424.464.484.524.55

4.57

4.61

4.67

Institutional Issues

5. Institutional Building and the Introduction of EconomicInstruments in Australia—The Path Ahead


B. Background 5.03Sources of greenhouse gas emissions 5.04Constitutional framework 5.06The Australian response to climate change 5.08

The government's Kyoto discourse 5.08Australian government GHG emission reduction expenditure—

fiddling while Australia burns 5.09

C. Australian Public Institutions and the Politics of Climate

Change 5.13

Benchmark public sector governance principles 5.13Lowering the veil of secrecy 5.16The government fails to adopt a holistic, whole of government

approach in developing public policy with respect tospecific issues • 5.20

Opacity of government information 5.24Politicized/combative/don't tell us and we won't ask 5.26Studied ignorance 5.29Non-inclusive 'public' consultation 5.30Receptive to interest group pressure, and publicly perceived to be such 5.31Controlling the discourse—dissemination of views through the media 5.39

D. Conclusion—what is to be done? 5.43

Contents

6. New Instruments on Old Turf: The Institutional Challengesof Environmental Taxation


B. The Forces of Fragmentation , 6.06The committees' jurisdictional divide in Congress: creating

fragmentation 6.06The committee referral process: implementing fragmentation 6.08

The committee referral rules 6.08The Energy Policy Act referrals 6.11The Superfund tax referrals 6.13

Congressional conference committees: fragmentation may continue 6.19Fragmentation at the agency level 6.22

The Department of Treasury 6.23The Environmental Protection Agency 6.25The Department of Energy 6.27The Council on Environmental Quality 6.29Why worry? 6.30

C. Institutional Elements that Attempt to Create Cross-jurisdictionalPerspectives 6.34The congressional rules: policy integration (in theory) 6.35

Obligation to study tax effect 6.36Oversight plans 6.37Tax expenditure studies 6.38Overlapping committee membership 6.41

Expert resources for integrated policy-making, design, and evaluation 6.42Congressional staff and hearings 6.43Agencies offering expertise 6.46

The budget process: integrating agencies' programme design, in theory 6.51The Government Performance and Results Act 6.52The government-wide plan 6.54Agency performance plans 6.55Strategic plans 6.56

Mandating agency consultation: integrating expertise duringimplementation 6.58

Consultation on criteria 6.59Consultation in programme design and project certification 6.60The benefits of consultations 6.62

D. Conclusion 6.63

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Design and Choice of Instruments

7. Applying the Principles of Adaptive Policy Design to n

Environmental Taxes


B. The Unpredictable Future , 7.03

C. Adaptive Policy and Ecosystem Management 7.08

D. Designing Adaptive Policy Instruments 7.12

E. Towards Adaptive Environmental Taxation 7.22

F. Conclusion 7.26

8. Ecological Tax Reform and Emissions Trading—Can They WorkTogether in Practice? An Empirical Analysis for Germany

A. Does Emissions Trading Supersede Ecological Tax Reform? 8.01Appraisal Criteria 8.05

Objectives 8.06Ecological tax reform 8.06Emissions trading 8.09

Structures 8.11Ecological tax reform 8.11Emissions trading 8.16

Sector-specific economic and social impacts 8.21Ecological tax reform 8.21Emissions trading 8.24

Administrative effort 8.27Ecological tax reform 8.27Emissions trading 8.28

Financial flows 8.29Ecological tax reform 8.29Emissions trading 8.31

Social acceptance 8.34Ecological tax reform ' 8.34Emissions trading 8.36

Legal evaluation 8.39Ecological tax reform 8.39EU Emissions Trading Scheme 8.40

Environmental impacts 8.43Ecological tax reform 8.43EU Emissions Trading Scheme 8.47

Contents

B. Interim Summary: Overlaps and Complementarities 8.48Transport sector 8.49Industry and energy sector 8.52Private households 8.58Crafts and trades, retail and services 8.59Better complementarity between the two instruments 8.62

Emissions trading approach 8.63Eco-tax approach 8.67

Making businesses taking part in emissions trading generallyexempt from eco-tax 8.68

Businesses taking part in emissions trading pay a reduced eco-tax,those parts of the business not participating in emissionstrading (administration, etc) pay the full eco-tax rates 8.71

Reductions in electricity tax for particularly energy-intensiveIndustries 8.72

Introduction of a comprehensive primary energy taxation System 8.73Is such theoretically desirable optimization politically wise? 8.75

C. Conclusions 8.78

9. Coordinating Energy Taxes with the EU Emission Trading System

A. Comparing Taxes and Tradable Permits 9.06

B. Legal Framework for Energy Taxes and Emissions Trading inthe European Union 9.09The Energy Taxation Directive 9.09The EU Emission Trading Directive 9.15Regulatory overlap 9.20

C. State Aid Regimes under die Energy Taxation Directive 9.24The text of the Energy Taxation Directive 9.31Decisions of the European Commission on Article 17(4) of the

Energy Taxation Directive 9.35

D. The Environmental State Aid Guidelines 9.39

E. Simultaneous Use of Energy Taxation and Emission Tradingin Europe 9.47The Dutch regulatory energy tax 9.51The UK Climate Change Levy 9.59

F. Exemptions from Energy Taxation for Companies Coveredby the EU Emission Trading Scheme 9.65Some relevant criteria to access the compatibility of exemptions

with the EU Treaty 9.69

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G. Discussion on the Coordination between Energy Taxes andTradable Permits 9.78As a principle, energy taxes and tradable permits should not be

cumulated 9.83^The allocation method 9.89Possible approaches within the current legal framework 9.92

Further exemptions or reductions authorized by the Council v 9.92Opt-out regimes 9.95

H. Concluding Remarks 9.97

10. Fraying Over Paying: Who Will Bear the Costs of Greenhouse Policy?


B. Jaccard, Rivers, and Home Plan 10.08

C. Internationally-based Tradable Permits 10.13

D. Model and Data OverviewCREAP dataCMRT model

ProductionProvincial representative agents and final demandTrade and import aggregationRest of worldEnergy/GHG features

New renewable electricitySequestration and sinksPermit coverage

Key uncertainties

E. Simulation ResultsClimate change alternatives under benchmark financing rule

IPTJHR-MAJHR-LAComparisons

Climate change options under alternative financing rules

F. Concluding Remarks

10.1610.1710.2010.2110.2410.2510.2610.2710.2810.2910.3210.33

10.3410.3610.3710.4310.4610.4810.50

10.51

References 254

11. The Political Economy of Taxes and Emissions Trading inAustralia's Climate Change Policies


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B. Pricing Signals 11.07Energy taxes - 11.12The evolution of tradable permits in Australia's climate change policies 11.18

C. Supply Side Policies for Addressing Climate Change 11.37Tax expenditure measures 11.38R&D expenditures and technology - 11.46Overview 11.49Perverse subsidies 11.50

D. The Development of Renewable Energy 11.52The Mandatory Renewable Energy Target Scheme 11.53State initiatives 11.60Overview 11.67

E. Demand Side Management Strategies 11.68Greenhouse Challenge Plus programme 11.73Other energy efficiency initiatives 11.82

F. Conclusion 11.87

Legal Limits

12. Green Taxes versus Economic Freedoms: An ECJ Case LawApproach


B. Environmental Protection as a General Interest: Shaping itsCharacteristics 12.11

C. The Importance of Declaring the Aim of the Provision whenEnvironmental Taxes are Established 12.17

D. Maintaining the Institutional Balance: The Legal BasisMust Always Correspond to the Content and Aim of the Act 12.19

E. A Further Requirement: Fiscal Instruments Must be BothNecessary and Proportional (Effective, Appropriate,Least Restrictive) , 12.24

F. When the Effects May Exceed the Aims: State Aids andTax Incentives 12.29

G. The Time Factor: State of the Art, Transitional Periods,and Taxes as Transitional Measures 12.41

H. Final Remarks 12.47

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Psychological Dimensions

13. Reconsidering Crowding Out of Intrinsic Motivation fromFinancial Incentives: The Case of Conservation on Private Lands


B. Financial Incentives and Crowding Out: A Trojan Horse? 13.06You can't lose what you never had: the role of ex ante motivation 13.07High-cost actions and the practical significance of motivation 13.09The lack of evidence for motivation spill-over effects "13.12A comparative assessment: the limitations of regulation 13.17

C. Minimizing Crowding Out Effects 13.20Rightsizing excessive financial incentives 13.21The importance of framing feedback to emphasize achievement

and autonomy 13.24

D. Conclusion 13.27

III NATIONAL CASE STUDIES

Transport

14. Assessment of Fiscal Measures on Atmospheric Pollutionfrom Transport in Urban Areas


B. Econometric Estimation of the Transport Demand Model 14.05Estimation of the household demand system 14.06Estimation of the cost function of public transport providers 14.13

C. Simulations 14.17Definition of the scenarios 14.18Methodology 14.19Results of the simulations 14.26

D. Conclusions 14.32

15. Motor Fuel Taxation and regional Development: Economic,Environmental, and Legal Aspects


B. Crafting an Appropriate Policy Response 15.09

C. Motor Fuel Taxation and Regional Development 15.17

D. Policy Simulations for New England 15.21

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E. Projected Regional Impacts of Gas Tax Reform 15.27

F. Legal Dimensions of Gas Tax Reform 15.31

G. Conclusions 15.40

References 367

16. Regulatory and Related Policy Drivers and Barriers to SustainableInnovation: Energy Sources in Vehicles

A. Introduction 16.01The rationale 16.02The five principles 16.03

B. Technologies and Innovation: Energy Sources in Vehicles 16.08Drivers for and barriers to sustainable innovation 16.09Response strategies 16.19

N Systems perspective and SI policy 16.28

C. Assessment of Selected Policy Instruments Affecting TechnologyInnovation for Energy Sources in Vehicles 16.42Introduction 16.42Assessment of the EU Batteries Directive 16.50

Key elements 16.55Scope 16.56Implementation activities for the current Directive 16.57

Criteria for assessing the impact of the Batteries Directive onsustainable innovation 16.58

Encouraging long-term thinking 16.58Overcoming lock-in, niche development, and promoting

technological diversity 16.60Continuation of locked-in technologies 16.63Niche development for new technologies and

technological diversity 16.66Promoting knowledge networks and a skills base 16.69

Criteria relating impacts of the Batteries Directive tothe policy process 16.70

Making sustainable innovation an explicit goal ofpolicy-making 16.70

Ensuring broad stakeholder participation 16.71Developing a coherent and integrated mix of policy

instruments 16.73Incorporating 'policy learning' 16.75

Assessment of the Voluntary Agreement within the EU strategyon CO2 emissions 16.76

Key elements 16.82

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Scope 16.83Implementation activities 16.84

Criteria assessing the impact of the Voluntary Agreementwithin the EU Strategy on CO2 emissions on sustainableinnovation 16.85

Encouraging long-term thinking 16.85Overcoming lock-in, niche development, and promoting

technological diversity 16.86Promoting knowledge networks and a skills base 16.91

Criteria relating to the impacts of the Voluntary Agreementwithin the EU Strategy on CO2 emissions on the policyprocess 16.93

Making sustainable innovation an explicit goal ofpolicy-making

Ensuring broad stakeholder participationDeveloping a coherent and integrated mix of policy

instrumentsIncorporating 'policy learning'

Assessment of car taxation as a fiscal measure within theEU strategy on CO2 emissions

Key elementsScopeImplementation activities

Assessment of the impact of car taxation based on CO2

emissions on sustainable innovationEncouraging long-term thinkingOvercoming lock-in, niche development, and promoting

technological diversityPromoting knowledge networks and a skills base

Criteria relating to the impact of car taxation onthe policy process

Making sustainable innovation an explicit goal of policymaking

Ensuring broad stakeholder participationDeveloping a coherent and integrated mix of policy

instrumentsIncorporating 'policy learning'

D. Summary and Conclusions

16.9316.94

16.9516.97

16.9816.10416.10516.106

16.10716.107

16.10916.110

16.111

16.11116.112

16.11316.114

16.115

17. Evaluation of Potential Changes in the Tax Treatment of

Company Cars in Canada


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B. Current Vehicle Policies in Canada and the Tax Treatment ofCompany Cars in Canada and the United Kingdom 17.07Current passenger transport policy in Canada 17.07Company car tax treatment in Canada 17.09Company car tax treatment in the United Kingdom 17.14

C. Method 17.19Description of proposed policy 17.19Description of model 17.21

D. Results ^ 17.26Impacts of changes in company car tax treatment on CO2 and

CAC emissions 17.26Impacts of changes in company car tax treatment on vehicle

and fuel purchases 17.28Results for alternative policy specifications 17.30Results from sensitivity analyses 17.32

E. s Discussion and Conclusion 17.33

Energy

18. The Energy Regulation in Italy: Enhancing Sustainability


B. The European and Italian Energy Sector: A ShortComparative Review 18.03

C. Support of Renewable Energy and the GreenCertificates Market 18.07From feed-in tariff to renewable portfolio standard 18.13Other economic measures to support RES 18.29

D. Energy Efficiency Titles (White Certificates) 18.35The creation of an energy efficiency title market: basic elements 18.38

The size of the target 18.38Eligible projects 18.39Issuing energy efficiency titles or white certificates 18.40The financing mechanism: tariff regulation 18.41Baselines and additionality 18.42

E. Emission Trading 18.44

F. Conclusions 18.56

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19. New Zealand's Failed Attempt at a Carbon Tax—Fatally Flawed orMismanaged?

A. Introduction and Overview 19.01

B. Environmental Taxation Initiatives Generally 19.06

C. The Kyoto Protocol and New Zealand s Position 19.12Background to the Kyoto Protocol 19.12New Zealand's position regarding the Kyoto Protocol 19.13

D. The Carbon Tax Proposal and Public Submissions 19.14New Zealand's carbon tax proposal in detail 19.14Submissions on the proposal 19.27

E. Withdrawing the Carbon Tax and its Aftermath 19.35The first signs of 'distress'—errors in methodology, calculations,

and projections 19.35Intervention of the 2005 General Election and later decision to

withdraw the proposal 19.46

F. Discussion and Review—What Can We Learn? 19.52


Natural Resources

20. The Need to Shift Canadian Tax Incentives to Reduce theImpact of the Mineral Industry on the Environment and LocalCommunities

A. Introduction and Summary 20.01

B. The Mining Footprint at All Stages of Mining 20.04

C. Depletion or Stewarding Our Mineral Resources for the Future 20.13

D. The Tax Regime for Mining in Canada 20.22Layers of taxation paid by mining companies 20.23Provincial governments and territorial governments 20.27Federal expenses and deductions specific to the mining industry

operating in Canada 20.29Resource allowance 20.30Canadian Exploration Expenses 20.31Canadian Development Expenses 20.32Flow-through shares 20.33Investment tax credits for exploration 20.34Deduction of Mine Reclamation Trust contributions 20.35

Tax planning considerations—the valuation allowance 20.36The provincial mining tax regimes 20.38

Tax holidays 20.41

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E. More Detail on 'Super' Flow-Through Shares 20.42

F. Costs to Communities and Eco-systems—Two Examples 20.46

G. The Need for Appropriate Data Gathering and Analysis 20.49

H. Recommendations—Shifting Incentives: Protecting

Resources for Future Generations 20.56

21. Taxation and a Clean and Healthy Environment: A Case Studyof the Mining of Titanium in Kenya


B. Environmental Taxation: The Polluter Pays Principle 21.15Environmental tax components 21.17Taxation theories that are applicable in mining and the environment 21.20

C. The Environmental Taxation of Mining in Kenya 21.27N Mining practices and the environment in Kenya 21.32

Legislation on mining, the environment, and taxation 21.37The Mining Act 21.42The Environmental Management Act and the National

Environmental Management Authority 21.46Environmental taxation in Kenya 21.52

Titanium Mining in Kwale 21.55The Tiomin-commissioned EIA 21.61The opposing Kenyatta University EIA 21.64The economic benefits 21.70

D. Recommendations 21.75

E. Conclusion 21.79

Toxics and Waste

22. An Analysis of the Effectiveness and the Side-efFects ofthe German Wastewater Fee Law


B. TheAbwasserabgabengesetz 22.04Brief history and intended purpose 22.04Statutory provisions 22.05Relationship to the Wasserhaushaltsgesetz 22.07Administration 22.08

Permitting and enforcement by the states 22.08Self-determination of the maximum pollutant discharge 22.09Calculation by the states 22.11

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Exemptions 22.12Use of the funds collected 22.,13

C. Present Consequences of the Statute and its Implementation 22.15No necessary relationship to the environment 22.15Fee levels are now too low to have the desired 'steering effect' 22.16Too few pollutants are covered 22.19Failure to cover both concentration and quantity of pollutants 22.21The 'annual maximum' approach provides no incentive to lower

pollution at some times but not others 22.23

D. Political and Regulatory Side-effects 22.24

Negative effects 22.24A licence to pollute, undermining public perceptions of legitimacy 22.24State dependence on the fees 22.25High costs to municipalities and industry in cases where no further

reductions are feasible 22.26Positive effects 22.27

May enhance public confidence in the 'polluter pays' principle 22.27Major incentive towards enforcement of the command-and-control

requirements of the WHG 22.28

E. Conclusions 22.30

Strong support for the truth of the saying that the 'devil is in thedetails' 22.30

Crucial importance of understanding the relationship to otherregulatory requirements 22.31

Assessment of any fee or tax should look not only at the benefits,costs, and unintended adverse side-effects, but also unintendedbeneficial effects 22.32

Summary 22.33

23. Extra Strength Sewer Surcharges in Ontario: D o they really Reduce

Contaminant Loadings?

A. Introduction • 23.01

B. Extra-strength Sewer Surcharge Programmes in Ontario 23.11

C. Charge Rates, Trends, and Formulae 23.17

D. Do Extra-strength Sewer Surcharges Induce Reductions in

Contaminant Loadings? 23.29

E. Enhancing the Design of the Extra-strength Sewer Surcharge 23.57

F. Conclusions 23.60

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24. Pesticide Reducing Instruments—An Interdisciplinary Analysisof Effectiveness and Optimality


B. Previous Research , 24.05

C. The Model Framework 24.12

Agricultural Applied General Equilibrium of the Danish Economy(AAGE) 24.14

Econometric Sector Model for Evaluating Resource Applicationand Land use in Danish Agriculture (ESMERALDA) 24.20

Animal, Landscape and Man Simulation System (ALMaSS) 24.26Geological/hydrological assessment 24.37Economic valuation of biodiversity and groundwater 24.40

D. Three Policy Scenarios for Reducing Agricultural Pesticide Use 24.43

Definition of scenarios 24.44Baseline scenario 24.44Three pesticide reduction scenarios 24.48

Scenario results 24.53Baseline scenario 24.53Pesticide reduction scenarios 24.62

Costs and benefits of pesticide regulations 24.78

Determining the optimal level of regulation 24.85

E. Conclusion 24.87

References 596

Subsidies

25. Analysis of Energy-Related Subsidies in Austria


B. Energy-related Subsidies in Austria 25.12Expenditures for energy-related research and development 25.15Investment subsidies for company emission reduction measures 25.19Tax relief for electricity, natural gas, coal, and mineral oil 25.21Feed-in tariffs for electricity from renewable energies 25.28

C. Subsidies for Housing Construction 25.34

Empirical; analysis of private households' heating costs 25.37

D. Summary and Conclusions 25.44

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26. Subsidy Impact Assessments and Subsidy Monitoring—Opportunities to Advance the Reform of EnvironmentallyHarmful Subsidies in Germany


B. Definition and Identification 26.04

C. Subsidy Impact Assessments with Particular Focus on EHS:A Selective Overview 26.10Energy subsidies in Germany 26.12

Subsidy monitoring 26.13Subsidy impact assessments 26.19

Transport subsidies in Germany 26.24Subsidy monitoring 26.26

Subsidy impact assessments 26.38

D. Linkages to Policy Reform 26.43

References 646

Municipal Level

27. Tax Reform as if Sustainability Mattered: A Policy Analysis toDemonstrate the Viability of Environmental Tax Shifting inVancouver's Sustainability Precinct


B. Policy Alternatives for Development of the Precinct 27.05Status quo 27.06Environmental tax shifting 27.07Government led initiatives 27.08

C. Policy Goals 27.09

D. Impacts on Automobile Use 27-10Assumptions used to calculate the status quo 27.10Impacts of each policy alternative 27.11

E. Impacts on Water Use • 27-14Assumptions used to calculate the status quo 27-14Impacts of each policy alternative ? 27-15

F. Impacts on Stormwater Runoff 27.18Assumptions used to calculate the status quo 27.18Impacts of each policy alternative 27.19

G. Impacts on Carbon Dioxide Emissions 27.22Assumptions used to calculate the status quo 27.22Impacts of each policy alternative 27.23

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H. Impacts on Solid Waste 27.26

Assumptions used to calculate the status quo 27.26Impacts of each policy alternative 27.27

I. Analysis of Options by Criteria 27.30

J. Recommendation 27.35

28. Trading Greenbacks for Green Behaviour: Oregon's and the City ofPortland's Environmental Incentives

A. States' Use of Economic Instruments for Environmental

Stewardship 28.03

B. Oregon's and Portland's Environmental InitiativesOregon

Oregon's energy policyTax incentivesBusiness tax creditsResidential tax credits

Oregon's other environmental incentivesPortland

Portland's energy policyIncentives used by Portland to implement environmental changes

Energy contractRetrofit and retiming of traffic signalsFuel cell energy

Incentives offered by Pordand to its citizens to achieveenvironmental goals

Portland General Electric Residential and Office of SustainableDevelopment (Green Investment Fund)

Portland Development Commission (Commercial andResidential)

Intergovernmental coordination

C. Environmental Justice: The Connection to Economic

Instruments

Defining environmental justiceDo environmental tax incentives raise environmental justice

concerns?Conclusions

28.0428.04

28.0428.0628.0728.1728.2228.2328.23

28.2828.2828.2928.30

28.31

28.31

28.3228.33

28.34

28.35

28.4028.46

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General

29. The Tragic Paradox: Germany's Very Successful But Not VeryPopular Green Budget Reform: Lessons from Seven Years of CourageousTurnaround (1999 to 2005)

A. Introduction: Current US Momentum is Helpful, butEU Experience Remains Vital 29.01

B. Eco-tax Reform Only Core Element in Germany's Much

Wider Green Budget Reform 29.12

C. Some More Facts About What Germany Did 29.23

D. Environmental Effects: CO2 Emissions Decrease,New Technologies on the Up 29.29

E. Economic Effects Benefit Pensions and Labour andRefute Critics of the Eco-tax 29.34

F. The Political Balance Sheet of the Reform Package 29.42

30. Estonian Ecological Tax Reform Successfully Launched


B. Development of the Ecological Tax Reform 30.10

C. The Principles and Tools of the ETR 30.14

D. Successful Start of the ETR: Environmental Charges Act 30.23

E. First Results and Conclusions 30.30

31. Taxes and the Success of Non-Tax Market-Based EnvironmentalRegulatory Regimes

A. US Federal Income Tax Treatment of Conservation Easements 31.06

B. US Federal Income Tax Treatment of Tradable EmissionsAllowances . ' 31.22

C. Conclusion 31.47

32. Revenue Neutral Environmental Tax Reform—Case of theCzech Republic

A. Introduction 32.01Proposed ETR in the Czech Republic 32.04

Principles 32.05Exemptions 32.07

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Tax rates 32.08Tax revenues and revenue recycling 32.10

B. Administrative Effectiveness of the EnvironmentalCharges and Taxes 32.16Charges and taxes from the perspective of administrative

effectiveness 32.18Administrative costs and assessment of the ETR 32.24

C. ETR and the Supply Side of the Labour Market 32.28Concept and measurement of demotivations 32.29The present situation in the Czech Republic 32.40Ex ante evaluation of the impacts of compensation measures

proposed by the ETR 32.46

D. Conclusion 32.57

References 780

33. The Limits to Self-Restraint and Eco-Efficiency, ProposedApplication of Environmental Taxation in JapaneseEnvironmental Policy

A. The Focus of this Chapter 33.01

B. History, Characteristics, and Theoretical Interpretations ofJapanese Environmental Policies 33.07The 'limits to self-restraint and eco-efEciency' in the Japanese

transport sector 33.12'Inverse eco-efficiency' and 'total environmental resource inputs' 33.16Severe deterioration of public transport 33.20

C. Current Efforts to Introduce an Environmental Tax in Japan 33.21Proposals to introduce an environmental tax 33.24The 2004 environmental tax plan 33.25

Basic planning 33.26Tax reductions 33.27Uses of revenue 33.28

The 2005 environmental tax plan 33.29Key concepts 33.30Objects and stages of taxation 33.32Tax revenue and tax rate 33.33Tax reduction 33.34Use of tax revenue 33.35Effects and impacts of the environmental tax 33.36Suggested measures using the revenue 33.37

The 2006 environmental tax plan 33.38"

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Bigger tax reductions 33.39Aims and focuses 33.40

Major opposition to and arguments against the environmentaltax plan in Japan 33.41

Arguments against an environmental tax 33.42Reasons for the environmental tax 33.43

D. Structural Problems in the Transport Sector and the Need forReform in Public Infrastructure Investment 33.45Diffused development in local core cities 33.47Rapid growth in private car fleet size and fuel consumption 33.48Substitution problem resulting from the lack of alternative transport 33.50Structure of die Special Purpose Tax for Road Improvements 33.54

E. Concluding Remarks: Proposals to Improve the Effectivenessand Efficiency of the Planned Environmental Tax 33.57Summary of the main points 33.57Enhancing effectiveness and efficiency of the planned

environmental tax reform 33.60

IV COMPARATIVE ANALYSIS

34. Marketing Market-Based Environmental Policy Instruments:The Case of the UK Climate Change Levy and the German EcotaxReform


B. A Brief Description of the Two Taxes 34.04The German ecological tax reform: the Ecotax 34.04The Climate Change Levy 34.06

C. How the Two Instruments were Conceived and Received 34.09The German Ecotax reform ' 34.09The PETRAS project in Germany 34.16Environmental awareness in Germany: the 2004 Survey 34.19The Climate Change Levy , 34.21The PETRAS project in the United Kingdom 34.24Conclusions: important contextual differences 34.26

D. Structural Explanations 34.27Tax rates 34.27Target groups 34.29

E. Stakeholder Involvement 34.32Negotiating policy in the United Kingdom: carrots and sticks 34.34

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F. Communication of Policy 34.39Use of language 34.39Conceptual issues 34.41Other communication issues 34.47


35. Market-Based Policies for Renewable Energy Source Electricity:A Comparative Evaluation


B. Criteria for Comparison 35.06Environmental effectiveness 35.07Economic efficiency , 35.09Distributional fairness 35.14Political feasibility 35.16

C. Policies to Foster Renewable Energy - 35.20Subsidies 35.23Regulated prices 35.25Regulated quantities 35.28Taxes 35.31

D. Experience with Different Policies 35.33Environmental effectiveness 35.34Economic efficiency 35.41Distributional fairness 35.46Political feasibility •> 35.51

E. Conclusion 35.58

36. Climate Change Post-Kyoto: A Tax Policy Perspective


B. Developments in the United Kingdom Since 1997 36.03

C. Developments in Australia Since 1997 36.11

D. The Current Position in the United Kingdom 36.19

E. The Current Position in Australia 36.24

F. Post-Kyoto Tax Policy Considerations 36.31


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37. Which Fiscal Instruments are Effective in Reducing Carbon Emissionsfrom Road Transport? Australia's Greenhouse Measures and TaxInstruments Compared Internationally

A. Transport Emissions 37.06

B. Growth of Emissions in the Transport Sector 37.10

C. Australian Government's environmental policy measures 37.15

D. Australian Government's greenhouse measures 37.17Greenhouse measures: 'Environmental Strategy for the Motor

Vehicle Industry' 37.19Fuel Consumption Guide 37.20Fuel Consumption Label 37.21Commonwealth fleet target 37'.22Voluntary fuel consumption target 37.23

Evaluation of the voluntary fuel consumption target 37.25Greenhouse gas abatement programme 37.28Behavioural change to travel patterns 37.29Government bio-fuels initiatives 37.32

Report by the Biofuels Taskforce 37.33Alternative Fuels Conversion Program 37.38State and Territory Action programme 37.42Travel demand management 37.44

E. Taxation Instruments Used to Reduce Carbon Emissions 37.46

F. Distortionary Tax Incentives 37.50Fringe Benefits Tax 37.51Conflict between taxation policy and environmental policy objectives 37.55Why not amend the Fringe Benefits Tax Law? 37.59UK car tax reform 37.65

Taxation measures adopted in the United Kingdom 37.67Calculation of the Car benefit 37.68Taxable value 37.70Impact on the choice of car 37.73

G. Fuel Taxation • 37.75Fuel tax credit subsidy 37.79

H. Taxation Measures Used to Encourage the Acquisition ofFuel-efficient Vehicles 37.84Incentive to purchase four-wheel drives? 37.88Other taxes, charges, and annual registration fees 37.90EU treatment of other taxes and charges 37.94European Union—annual registration (or circulation) tax 37.96

I. Conclusion 37.99

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V COMPLEMENTARY INSTRUMENTS AND

ALTERNATIVE APPLICATIONS

38. Designing Forest Carbon Markets for Efficiency, Ecology,and Equity

A. Background and Context 38.08Why forests matter: carbon, critters, and communities 38.08How a forest carbon market will affect forest management 38.20How a forest carbon market could benefit biodiversity and

aboriginal people: the Innu example 38.26

B. Designing Forest Carbon Markets to Provide MultipleBenefits 38.33Climate change and economic benefits 38.34

Cap and trade versus offsets 38.39Why are offset systems less effective? 38.45

Baselines 38.46Leakage 38.50

The fundamental dilemma with offsets: an example 38.53Should offset trading be used under Kyoto? 38.57Conditions for offsets as a transitional step 38.59

Where the regulatory infrastructure to support cap andtrade is not in place 38.60

Where there is significant resistance to cap and trade 38.61Where 'learning by doing' is needed 38.62

Institutional design 38.64Implications for CDM design 38.70

Biodiversity benefits 38.78Requiring projects to achieve net benefits for biodiversity 38.80Allowing avoided logging projects 38.82Moving to cap and trade 38.83

Benefits for aboriginal people 38.85Allocating carbon rights 38.88Allowing avoided logging projects 38.90Streamlined rules for smaller projects 38.92

C. Conclusions 38.94

39. Tax Strategies to Deal with an Environmental Disaster


B. Environmental Taxation and Post-disaster Relief 39.02

C. Hurricane Katrina 39.04

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D. Environmental Tax Strategies Included in the HurricaneTax Acts 39.06Tax incentives to encourage voluntary redevelopment support 39.07Tax incentives for businesses and investors to rebuild in

the disaster areas 39.11Tax incentives to encourage individuals to return to

the disaster areas 39.14Tax relief for hurricane victims 39.17

E. Summary and Conclusion 39.20

40. Targeting Financiers: Can Voluntary Codes of Conduct for theInvestment and Financing Sectors Achieve Environmental andSustainability Objectives?


B. Voluntary Codes of Corporate Conduct 40.05

C. Voluntary Codes in the Financing and Investment Sector 40.10The Equator Principles 40.11Principles for responsible investment 40.18

D. Finance and Investment Codes in Operation: Concerns,Controversy, and Implementation 40.21Positive developments 40.23Concerns and controversy 40.25

Baku-Tblisi-Ceyhan pipeline 40.28Sakhalin II 40.32

E. Concluding Remarks 40.34

Index 963

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critical issues in environmental taxation · 2008-05-05 · the environmental protection agency...

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