Proposals of environmental fiscal reforms and the obstacles to their implementation

Abstract

This paper discusses recent developments in the area of energy and environmental taxes in selected European countries. Its main focus is the more profound tax shifts, sometimes also called environmental fiscal reforms, which involve an increase in energy and environmental taxes and the simultaneous decrease in other taxes, such as taxes on labour. Often the tax shifts have resulted from the recommendations of Green Tax Commissions, on the basis of analyses of the whole fiscal system. In countries where such commissions have not been set up by national governments, fiscal reform packages have been proposed by NGOs and research institutes, but have generally not been fully implemented. The paper also discusses some of the obstacles to the implementation of these reforms, and shows that these obstacles can be overcome. The conclusion of the paper is that the principal benefit of environmental fiscal reforms is environmental, but there are no grounds for thinking that they are economically harmful. Copyright © 2000 John Wiley & Sons, Ltd.