The Eighth Annual Global Conference on Environmental Taxation
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Workshop 5: Resource taxation, resource management and sustainability

Aggregate Taxes in Europe: An assessment towards
sustainable resource management, innovation and technological change

Prof. Raimund Bleischwitz, European Topic Centre on Resource and Waste Management;
Bettina Bahn-Walkowiak, Wuppertal Institute;
David Legg, European Topic Centre on Resource and Waste Management

Some 13 European countries tax aggregates, i.e. the extraction and use of granular materials, sand, gravel and crushed rock. An end-product in themselves as railroad ballast, filter beds or flux materials, aggregates are a raw material used in the manufacture of vital construction products such as ready-mixed concrete (made of up to 80% aggregates with the addition of e.g. lime and bituminous binder), motar, pre-cast products and asphalt (made of 95% aggre-gates). Their main application area is the construction and buildings sector. The paper looks at the most important aspects of the aggregates system throughout Europe and puts it into the wider context of sustainable resource management as launched by the European Commission in its thematic strategy (COM(2005) 670 final). It is the result of a two years cross-country study of the ETC-RWM (see footnote). The paper analyses the relevance of aggregates, why aggregate taxes have been introduced, how they have been implemented and in what context they contribute to sustainable buildings, innovation and technological change.
The paper is structured as follows: a first section looks at the relevance of aggregates, both from an environmental and from an economic perspective. A second section explains the pol-icy context of aggregate taxes and how research might disentangle the effects from those other policies from aggregate taxes. A third section gives results from a cross-country com-parison (Czech Republic, Italy, UK, Sweden). In that regard, the paper looks in detail at

  • The national context: Objective of tax, coverage of tax, how the tax is applied, tax rate on aggregates, tax as % of aggregate price or industry turnover, total revenue, aggre-gate tax revenue as % of total revenue, administrative cost of tax;
  • The market for aggregates: Companies operating & number of sites, total production, total recycled, per capita production of aggregates, relative economic relevance of ag-gregates;
  • Driving forces such as construction activities, costs of substitutes, energy and trans-port prices, geographic factors, legislation, etc.;
  • Effects and effectiveness of the aggregate tax, measured in terms of e.g. extraction ra-te, substitution processes, innovation effects downstream.

A fourth section gives overall evidence on success and failures of the aggregate taxes imple-mented so far and draws conclusions towards sustainable resource management in the area of construction, buildings and housing in the European Union.


Resource dividend – environmental-economic regulation beyond eco-tax

Damian Ludewig, Germany

Even today after more than a decade of scientific and political discussion the huge majority of the population does not understand the concept of the ecological tax reform. Their main reservation towards the German eco-taxation is the impression, that it is not socially balanced (Umweltdaten 2004, German federal Ministry for the environment).
Since rising crude oil prices on the world market have led to strong increases in energy consumer prices, even environmentalists don’t have the heart to ask for further steps in ecological taxation.

The German ecological tax reform of the government of chancellor Schröder from 1999 to 2003 didn’t even correct the undesirable development of the last 30 years: Still the state is financing it’s activities manly by making labour more expensive instead of the consumption of natural resources.
So it’s time for a new deal in ecological taxation:
The author will present the concept of a resource dividend. It doesn’t focus on the taxation of natural resources itself but on the justice of access to natural resources. The general idea is, that natural resources are undeserved resources. They exist without human activities. So nobody should call them its own – everybody has the same right to use them. But in reality, all natural resources belong to somebody. Instead of giving everybody his little claim it is possible – as a second best solution - to tax the use of natural resources and distribute its income to all people.

The resource dividend allows everybody to participate in the use of natural resources. This approach also reflects the principle that the higher the prices of resources are, the bigger the profit big companies make out of them, the more important gets the access to natural resources by an eco-dividend. All abiotic natural resources shall be taxed with a value based tax with three different levels for the different grades of potential damage of their use. The total income of the taxation will be divided through all citizens and all employees subject to social insurance contribution. This results into the resource dividend, which will be paid to every citizen and to the companies based on their number of employees .
The main advantages are:

  • better expression of the approach for political and public communication
  • wider ecological stimulation (because of the taxation of all abiotic natural resources)
  • better social justice (because everybody gets the same out of it)
  • stronger effect on the labour market (promotion of part-time jobs as companies shall
    receive the full resource dividend also for part-time employees)


Putting The Genie Back Into The Bottle: Adapting Subsidies Which Become Perverse
in Managing Environmental Challenges – Two Australian Case Studies

Prof. Hope Ashiabor, Macquarie University, Australia

Subsidies have been used by governments to encourage activities that, if solely left to the markets would result in less than socially optimal outcomes. In the environmental sphere, these instruments have been used to foster activities that are considered ecologically beneficial. Their unbridled use has fostered an over-exploitation of environmental resources and left a trail of economic inefficiencies and ecological damage in its wake.

This paper critically reviews subsidies provided for land clearing and afforestation projects in Australia. The latter was designed to foster the sustainable exploitation of natural resources. These concessions paved the way for the proliferation of agricultural managed investment schemes, most of whose dominant objective was to take advantage of the tax benefits on offer. The Federal Government proposes streamline the concessions from July 2008, with a view to excluding non-forestry agribusiness schemes from its purview. This paper evaluates the political and institutional challenges in reining in these subsidies in a bid to curb market distortions that they have given rise to.

However, like trying to extinguish spot fires, as one fire is brought under control another flares up. Under its greenhouse gas emissions trading arrangements, the carbon sequestering potential of forests are recognized as sinks and hence a source of carbon credits under the tradable permits arrangements. The paper critically evaluates the wider implications of the roll back of the tax concessions on these arrangements.

The paper examines the fine balancing act involved in managing the unintended effects of the tax expenditure measures in question. Lessons are extrapolated from these experiences with a view to formulating a strategy for minimalising the possibilities of such measures degenerating into harmful subsidies. The paper then draws upon these lessons and locates their relevance in removing market distortions in the reform of perverse subsidies.


Sinks – Fiscal and regulatory challenges of managing sinks
on the basis of the australian experience

Patricia Blazey, Head of Dep. of Business Law, Macquarie University, Australia

Though the Kyoto Protocol has a role for the reduction of green house gas emissions through sinks resulting from direct human land use change, it is otherwise ambiguous on carbon sinks and sink credits.  This paper addresses the fiscal and regulatory challenges of managing sinks on the basis of the Australian experience.

Apart from forests, sinks include oceans, fossil fuel deposits, the terrestrial system and the atmosphere.  However it is forests that can best be managed by humans.  As two thirds of the worlds terrestrial carbon is sequestered in forests, plants under the forest canopy, leaf and forest debris and forest soils, this clearly is an area that needs defining. 

Article 3.3 of the Protocol only allows for deforestation, reforestation and afforestation to meet legally binding greenhouse gas emissions targets.  As this limitation does not allow for the inclusion of global sinks, their value is not assessed in the Protocol’s emission reduction scheme.  However Australia at the time of signing the Protocol in 1998 was able to negotiate the inclusion of forests sinks in formulating its greenhouse gas reduction target of 108% of 1990 over the 2008-2012 period. Since then forest sinks have been included in its greenhouse gas inventory.  This paper address the fiscal and regulatory framework for managing sinks in Australia and it seeks to reconcile it with the treatment under the Kyoto Protocol mechanism. Further though national credits can be accrued where agricultural soil carbon sinks are built up, the method of calculating these credits is not addressed in the Protocol. Also only sink accumulations obtained during the five year commitment period between 2008 and 2012 are counted. The result is that though forest sequestration can be used to count towards carbon credits, the financial return will only accrue for the carbon captures between the period 2008-2012.


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