An Energy Tax for Europe

Energy and fuel prices and taxes

It also had one of the highest petrol and energy consumption taxes in the world.

A number of measures to promote the use of renewable energy are in place, including subsidies of up to 30 per cent on initial investments, funded, to some extent, by revenues from carbon and energy taxes.

Euro for euro, dollar for dollar, yen for yen energy and carbon taxes have a lower negative impact on a nation s economy, consumption, and jobs than income tax and VAT. For example, an increase in direct taxes, such as income tax, can reduce consumption by twice as much as energy and carbon taxes that raise the same amount of revenue.

Electricity produced in these two independent markets is subject to a carbon tax, and, for households, an energy tax.

Critics who worry about the cost of the energy tax have not thought about tax substitutions. They also do not seem to realize that an energy tax is a much cheaper way for Europe to protect itself from Iran and Russia than alternative means, such as a defense buildup.

New funds were urgently needed for accelerating the disbursement of renewable energy and existing energy efficient technologies and could be financed from air fare taxes similar to those imposed to combat terrorism.

Most of the technical reports conclude that, among the non voluntary sources, financial transactions taxes and environmental taxes might provide the largest amounts of additional resources in the long term.

Previous positions include partner, Bugge, Arentz Hansen law firm Director General, and Head of Business and Energy Tax Section, Tax Law Department, Ministry of Finance.

Luxembourg is a supporter of the introduction of a CO2 energy tax at the EC level, especially if implemented in the transport and residential sectors.

Preliminary discussions have also started on a special law on energy conservation, which might contain, inter alia, fiscal incentives for energy conservation.

(a) Through national energy policies, national governments strongly influence the quantity and source of energy within a country, the operation of centralized or national electrical utilities, tax policies and subsidies to certain energy sources

Environmental monitoring equipment is duty free, as are installations and equipment for environmental purification and alternative power source technologies.

There is no income tax, and customs duties account for about 35 per cent of government revenues other significant revenue sources are company fees, land and stamp taxes, employment tax, a hospital levy, vehicle licence fees and taxes on hotel occupancy, passenger departures and cigarette sales.

An IEA survey shows that tariff rates charged for renewable energy equipment in over 100 countries vary widely.

Most Parties use a variety of policy devices, including economic instruments to tax energy consumption, or provide financial incentives for energy efficiency investments.

Still, with the amount of real resources transferred to their governments already high, Europeans might balk at a further increase. That is why the energy tax must be imposed as a tax substitution, with income or payroll taxes simultaneously reduced to keep real resource transfers to government at a constant level.

Energy and carbon taxes on fossil fuels and on electricity have been applied in Denmark for a long time.

Source Ghana Customs and Excise.

But Europe can fight back. By imposing a stiff tax on energy consumption, Europeans would reduce both consumption of energy and its price in world markets, in turn cutting the flow of funds to Russia and Iran.

Commitments shall be fulfilled individually and not through coordinated actions. CO2 and energy taxation in particular shall be ruled out.

In many developing countries, total tax revenue is derived from three main sources domestic taxes on goods and services (sales and excise taxes), direct taxes (primarily on corporations), and, most important, taxes on foreign trade (import duties). But, as trade liberalization has lowered tariffs and duties, the share of trade taxes has declined, while other sources have not compensated for falling trade revenue.

Most of the revenue collected is from the import of khat.

China could usefully explore shifting part of the burden from labor toward property, capital gains, and inheritance taxes. Larger dividends paid to the budget from the highly profitable state enterprise sector could also provide an alternative source of funds.

One key idea was to lighten the tax burden on labor . Taking into account the personal income tax and various social contributions, taxation of labor income in China is too high . To be sure, taxes are needed to finance social spending, but revenue sources other than taxes on labor income could do the job. China could usefully explore shifting part of the burden from labor toward property, capital gains, and inheritance taxes.

Energy elements have been introduced into taxation as a first step, an 18 to 150 per cent increase in mineral oil taxes depending on the fuel type was implemented in May 1995 and, as a second, natural gas and electricity became subject to taxes from 1 June 1996 for energy intensive industries an upper limit regarding the tax burden (0.35 per cent of the net value added) has been introduced.

It has the most complete coverage of sources among those countries applying such an instrument, while the rate is lower than in some of them.

So the key to raising revenue is to reduce tax expenditures, use some of the resulting revenue to reduce tax rates, and devote the rest to reducing future deficits. Opponents of tax increases should see that, because such revenue raising is really cutting government spending, it does not imply the adverse incentive effects of raising marginal tax rates.

5 Council directive 2003 96 EC of 27 October 2003 on restructuring the community framework for taxation of energy products and electricity.

Countries with such incentive systems can serve as examples of utility based incentives for renewable energy technologies, tax incentives, fuel displacement levies and electricity feed in legislation, extension of loans to promoters of renewable energy and to consumers shifting to renewable energy technologies, market mechanisms and pricing policies such as net metering facilities and tax exemption on public bus purchases.

Part of the tax revenue should be channeled into subsidies for new low carbon energy sources like wind and solar, and to cover the costs of developing CCS. These subsidies could start fairly high and decline gradually over time, as the tax on CO2 emissions rises and the costs of new energy technologies fall with more experience and innovation.

Energy and carbon taxes can produce less economic pain and more gain than conventional taxes can. Europe needs fiscal consolidation, reductions in carbon emissions, and a strategy for economic growth.

The above measure could include fiscal instruments to promote the introduction into the vehicle fleet of more energy efficient cars, especially in terms of fuel consumption (for example, registration or annual circulation taxes, also for the existing vehicle fleet)

These and other taxes constitute a flagrant pillage of the financial resources of Arab citizens because they are unrelated to the provision of any services and, consequently, the tax cannot be justified by the basic purpose for which it is imposed.

(iv) Consideration of the sectors, sources and fuels which could be subject to taxation

In many countries, there is considerable scope for domestic resource mobilization. Broadening the tax base, improving tax administration, and closing gaps in the value added tax could make a significant difference in lower income countries, where tax revenues account for only about 10 14 of GDP, compared to 20 30 of GDP in high income countries.

Owing mainly to its environmentally negative externalities, an unregulated energy market is not a useful governing mechanism, because it is unable to internalize the environmental costs. It has been calculated that the most contaminating energy sources would have to pay a 70 tax to reflect their negative externalities.

Energy alternatives could become attractive as their costs decline as a result of economies of scale and as the real costs of traditional energy technologies are reflected in their price as, for example, through carbon taxes.

The main sources of Consolidated Fund revenues were income tax, which totalled 71.1 million import duties, which totalled 28 million and general rates, which totalled 12.7 million.

However, such flat taxes may significantly reduce the progressive impact of taxation.

Up to the late 1950s, income tax was the only major direct tax that provided resources to support a programme of welfare services.

The main sources of Consolidated Fund revenues were income tax, which totalled 45.3 million and general rates, which totalled 9.2 million.

(b) Progressively reduce subsidies of fossil fuels and reduce remove such subsidies, tax schemes and regulations which counteract an efficient use of energy

Executives Profesionals Administrators Source SUNAT, Staff management.