A Comparative Analysis of New Environmental Policy Instruments
Market-based instruments draw a lion’s share of attention in studies about new forms of environmental governance (see Chapter 2). Some European countries – in particular the Northern European countries – have used eco-taxes since the 1970s although much of the foundational economic thinking can be traced to the theoretical work which Pigou (1920) carried out in the 1920s (Weale, 1992: 158). Environmental economists widely see the main advantage of eco-taxes as providing price signals about the costs of negative environmental externalities (for example, OECD, 1994). Table 6.1 compares the changes over time for eco-tax revenue as a share of GDP. The Eurostat (2010b) data includes any tax whose base is a physical unit (or proxy) of something that has a proven, specific negative impact on the environment; it includes taxes on transport, energy pollution and resources. Energy taxes remain the largest amount of eco-taxes across Europe (more than 50 per cent of the total revenue) (Eurostat, 2010a). Between 1999–2007 the absolute environmental tax revenue increased for the EU-25 although it actually decreased as a share of total taxes and social contributions, as well as the percentage of GDP (Eurostat, 2010a). For 1999–2007 Austria showed an increase in the total tax and social contributions. In Germany and the Netherlands, eco-tax revenue as a share of total tax and social contribution increased while the share of GDP decreased. Initially most eco-taxes took the form of a charge on specific pollution, while the revenue would often go to support specific remedial efforts.
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