The Eighth Annual Global Conference on Environmental Taxation
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Workshop 3: Policy reviews: learning for the future

Design options for an energy tax in Switzerland –
what can be learned from existing approaches in Europe

Dr. Rolf Iten, Managing Director INFRAS Consulting, Policy and Research; M. Peter, H. Lückge, J. Trageser

Several European countries have introduced specific energy taxes or comprehensive ecological tax reforms to provide an economic incentive for the reduction of greenhouse gas emissions. These taxes and tax reforms are based on various approaches and models and have thus different impacts on the environment, economy and employment. In order to analyse the effectiveness of existing energy tax systems and to identify optimal design features, the Swiss Federal Office for Energy has commissioned a systematic review of existing energy taxes which should help to derive a possible approach for Switzerland where the introduction of an energy or CO2-tax is still discussed or short-time before implementation respectively.

This paper for the Eighth Annual Global Conference on Environmental Taxation will build on this research. The first part of the paper will focus on the main findings of the systematic review of existing energy taxes. The review particularly focuses on the assessment of the energetic and ecological response to the different energy tax systems as well as their economic impacts. Taking into account that Switzerland as small economy is more sensitive to changes in its tax system, the review has analysed the impact of energy taxes on employment, economic growth, competitiveness (mainly of energy-intensive sectors), trade, price level and other economic criteria.

Along this list of criteria, existing evaluations of energy taxes in Europe are analysed and their main findings concerning effectiveness of the energy tax are evaluated and compared. For quality assurance, the methodological approach of existing evaluations is checked and only results of scientifically accurate research is further considered in the review. As some countries have unfortunately not evaluated their energy taxes in a systematic way, the systematic review comes down to about a handfull of countries which have taken a fore-runner position in the field of energy taxes (e.g. the Scandinavian countries, UK, the Netherlands and Germany).

Based on the results of the systematic review, the second part of the paper will derive recommendations for a potential energy or CO2-tax in Switzerland. From the comparison of exisiting energy taxes, the most effective design features are identified and their compatibility with the Swiss economic background is assessed. As Switzerland is a small economy, this also includes the assessment of potential adverse effects which arise from different taxation systems in neighbouring countries (e.g. tank tourism).


The Irish Plastic Bag Levy – A Review of its Performance 5 years on

Dr. Simon McDonnell, Dr. Susanna Ferreira, Dr. Frank Convery, University College Dublin, Ireland

In March 2002, the Irish Government introduced a 15 Euro cent environmental levy on all shopping plastic bags, previously provided free of charge to consumers at points of sale. The immediate effect was dramatic. Early research by these authors estimated a 90% reduction in the use of impacted bags. Associated gains in the form of reduced littering and negative landscape effects were also recorded. Administration of the levy was simple and associated costs amounted to 3 per cent of revenues. Despite some initial hostility to the proposal in some quarters, acceptance by stakeholders has also been widespread. The fact that such a product tax has influenced consumer behaviour in such a dramatic way has heightened interest in it use amongst policymakers both in Ireland and elsewhere. Similar levies have been proposed in jurisdictions as diverse as Scotland and Australia. Meanwhile, policymakers in Ireland have proposed environmental charges on products from Automatic Teller Machine (ATM) paper receipts to chewing gum wrappers. Most recently, Irish policymakers have begun investigating imposing a levy on conventional light bulbs to encourage a switch to long-life alternatives. Despite all this, the longer term performance of the plastic bag levy remains a very under-researched area. In recent years, levy tax receipts (and therefore usage of plastic bags) have increased significantly (however, usage is still well down on pre-levy levels). This fact, along with some anecdotal evidence indicating a slippage in the performance of the levy has led to the Irish Government indicating that it will increase the levy from 15 to 22 Euro cents. This paper reviews the performance of the levy over the last five years while also offering some preliminary analysis on the impact of the increase in the levy. This involves an analysis of the longer term consumption patterns and associated downstream impacts. In addition, the attitude of key stakeholders and policymakers is also re-examined. Despite its perceived success, similar policy initiatives have been slow to emerge, therefore we also identify and analyse some of the barriers to wider implementation of such policies.


Administrative costs of the Czech System of Environmental Charges

Jan Pavel, Leoš Vítek, University of Economics, Prague

The Czech current system of environmental charges was established on the start of economical transformation. Now, the system seems to be obsolete, because of significant changes in environmental and economical conditions. Therefore it would be suitable to evaluate the real operation of this type of instrument. This paper analyses a selected sample of environmental charges from the administrative costs point of view.

The paper is divided into three sections. The first part summarises the possibilities, how to evaluate the effectiveness of the system of environmental charges. The second part contains the description of the research methodology especially the concept of measurement of the administrative costs. Last part is the conclusion. Here we specify the results of our research and propose some political recommendation.

The results of our measurement show that the charges are much more expensive than other taxes. Moreover, it is not possible to identify any significant influence on the behaviour of the economical subject. Current role of the charges is only the source of public revenue but the charges are too expensive for this role. Therefore the paper discusses the possible reforms scenarios of the system of environmental charges as well.


Green, White and Brown Certificates working together: the Italian experience

Fiorenza Carraro, Andrea Zatti, Prof. Giorgio Panella, University of Pavia, Italy

The paper analyse the range of market-based instruments employed in Italy to promote the diffusion of renewable sources (green certificates), to foster energy efficiency improvements (white certificates), and to reduce greenhouse gas emissions (brown certificates). The relevance of the Italian case study is due to the fact that it presents a long-lasting and multifaceted use of market instruments (Italy and Great Britain, for example, are the only two cases in the EU-25 where white and green certificates and emission trading have already been introduced in parallel), and can therefore provide relevant indications on the possibility/opportunity to extend their application at the European scale and, meanwhile, on the need to find better internal coordination and coherence among them.

For the efficient functioning of marketable permits a genuine market for trading in such certificates must develop and an equilibrium market price must be established.

The effectiveness of such a mechanism in delivering the expected results crucially depends on a number of factors such as: the actual technical-economic potential; the number of actors involved in the market, their variety in terms of technological options as well as costs, the degree of complexity of the rules shaping the mechanism. Therefore the analysis will mainly focus on advantages and pitfalls encountered in the Italian experience to identify which are the potential transformations that can be done in order to improve the effectiveness of certificate’ systems and how these instruments can work together.

Economic theory explains that the wider the certificate systems is (for actors and sectors involved), the greater cost effectiveness can be reached. Integration of emission permits (brown certificates), white and green certificates in a single scheme could bring about in this way a lot of benefits such as high economic efficiency and the maximum level of environmental benefit. But it can’t be ignored that such enlargement also lead to an increase in costs due to monitoring and control.

The last part of the paper investigates the possibility of making the three types of instruments work together, taking into account that they are quite different under certain aspects and what can be done to improve harmonization. Moreover, a particular attention will be devoted to the trade off between cost effectiveness of the instrument on one side, and the exponential growth of costs connected to monitoring and verification on the other.


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