Commission pushes environmental taxation

The Commission has said a number of EU member states could be making more and better use of environmental taxation.

The observations come in a series of analyses of how 27 countries (all 28 members except Greece) are managing their 2015 finances, in particular how they are enforcing EU budget rules and whether they are doing what they can to promote economic growth.

Some countries are simply encouraged to make more use of environmental taxation, while others are criticised for having a tax regime that incentivises environmentally damaging behaviour.

Poland is singled out for not basing its vehicle taxation on CO2 emissions. Belgium’s favourable tax treatment of company cars is also highlighted as creating “harmful environmental and economic effects in terms of congestion costs and pollution” and removes the price signal to the driver, hindering “some of the incentive effects of efficient environmental taxation (for example, km charging)”.

A recent T&E report ranked the counties with the best and worst taxation systems for stimulating the purchase of more fuel-efficient cars. The report found initial registration taxes (purchase taxes) and company car taxes that are steeply differentiated by CO₂ boosted the purchase of lower-emissions cars in the Netherland, Denmark and France. In contrast Germany, Poland, Czech Republic, Sweden, Finland and Austria were among the countries with the highest CO2 emissions from new cars and weakest national tax policies.

The Commission will make formal recommendations to the 27 states in May.