More information on environmentally related taxes, fees and charges

It is important to be aware that the nominal tax rates described in some of the queries do not provide the full picture concerning how different tax-bases are taxed. In most cases, the respective taxes, fees and charges include important exemptions, refund mechanisms, etc. Thus, queries describing these mechanisms should also be consulted before any conclusions concerning "effective tax rates" are drawn.

Definition of environmentally related taxes

This database defines environmentally related taxes as any compulsory, unrequited payment to general government levied on tax-bases deemed to be of particular environmental relevance. Taxes are unrequited in the sense that benefits provided by government to taxpayers are not normally in proportion to their payments.

Requited compulsory payments to the government, such as fees and charges that are levied more or less in proportion to services provided (e.g. the amount of wastes collected and treated), are also included in the database. The term levy can be used to cover both taxes and, fees and charges. The queries maintain a clear distinction between taxes and fees/charges, but in this introduction, and in the names of the queries, the term "taxes" sometimes includes both taxes and, fees and charges.

The primary focus of the database is on pollution-oriented levies and tax-bases, but levies related to certain categories of resource management have also been included. The tax-bases covered include energy products, transport equipment and transport services, as well as measured or estimated emissions to air and water, ozone depleting substances, certain non-point sources of water pollution, waste management and noise, in addition to the management of water, land, soil, forests, biodiversity, wildlife and fish stocks.

The name, or the expressed purpose, of a given tax is not a criterion in this project. The focus is instead on the potential environmental effects of the given tax, which is determined by the tax impacts on the producer and consumer prices in question, in conjunction with the relevant price elasticities.

Total revenues from environmentally related taxes

The three graphs below show total revenues from environmentally related taxes in per cent of GDP, total tax revenues and per capita in OECD member countries respectively. In these graphs, revenues from fees and charges are not included. The graphs should be interpreted with caution -- and in conjunction with the queries that provide details on the taxes in the various countries. Few -- if any -- inferences concerning the "environmental friendliness" of the tax system in the countries can be drawn from the graphs below alone. For instance, low revenues from the taxes in question could either be due to little use of environmentally related taxes, or due to broad use of such taxes, where high tax rates have caused significant changes in behavioural patterns among producers and consumers (e.g. reduced emissions).

Similarly, high revenues per capita can in some cases be caused by foreign persons purchasing significant amounts of a taxed product in the country in question because the tax rates there are lower than in neighbouring countries. Also, the share of revenue from environmentally related taxes in total tax revenue is influenced by the extent of taxation of non-environmentally related tax-bases. Further details concerning the actual design of each of the taxes can be found through the queries on the homepage.

If you click on the first three graphs below, you can see a PDF file that contains the underlying data for each of the years 1994-2006.

For France, 2004 figures are used instead of 2006. The averages are calculated only across the countries for which 2006 numbers are available. Please notice that the historic GDP data used to calculate this figure were updated 05.03.09, causing relatively significant modifications for some countries.

For France, 2004 figures are used instead of 2006. The averages are calculated only across the countries for which 2006 numbers are available.

The numbers in the graph above are not adjusted for inflation. For France, 2004 figures are used instead of 2006. The averages are calculated only across the countries for which 2006 numbers are available.

Reasons for the relative decline in tax revenue from environmentally related taxes

From the first graph above one could see that the revenues from environmentally related taxes declined on average in OECD countries between 1996 and 2006 when measured in per cent of GDP. The graph below shows the development of the arithmetic and weighted average of this indicator for each of the years between 1994 and 2006. Further analysis indicates that the decline in revenues from environmentally related taxes measured against GDP in recent years is related to a decline in the use of petrol in most OECD countries in this period.

The next graph, based on IEA data, illustrates the use of petrol and diesel per unit of GDP in OECD Europe, where motor fuel taxes play a particularly important role. The graph also illustrates the development of the (pre-tax) Rotterdam spot market price of petrol. The strong increases in market prices for petrol from 1999 to 2000, and from 2003 to 2006, contributed significantly to the decreased use of petrol in particular. Between 1994 and 2006, petrol use per unit of GDP decreased 40% in OECD Europe -- while diesel use per GDP unit increased 18%. While 28.5 tonnes oil equivalents of petrol or diesel were used per GDP unit in 1994, 24.8 tonnes were used in 2006, a decrease of 13%. And given that the tax rate of petrol is on average 25% higher than the tax rate for diesel, the shift from petrol to diesel use also contributes significantly to reduce the revenues from fuel taxes in per cent of GDP. The impact on the tax revenues was strengthened further by a slower-than-before increase in the fuel taxes after 2000. For example, while the average petrol tax rate in OECD Europe increased 5.1% per year between 1994 and 2000, the annual increase in the average petrol tax was only 1.25% between 2000 and 2006.

The graph below illustrates similar developments for 9 individual OECD member countries. (For technical reasons, it is not possible to include 2006 figures in that graph, but the relevant numbers are available in the underlying pdf-file.)

Total revenues from environmentally related tax-bases

The graph below shows estimates of how much revenue is raised on various environmentally relevant tax-bases in OECD Member countries. Revenues from fees and charges are again not included. Two types of tax-bases dominate the picture: Motor fuels and motor vehicles. More than 90% of all the revenues from environmentally related taxes are raised on these sources. Very small revenues are raised on tax-bases such as heavy fuel oil, coal and coke, which typically are used in heavy industries. Information for 1995 was used to prepare the present graph, but the main findings are still valid.

Two changes in the composition of revenues since 1995 should, however be pointed out: First, whereas the total share of revenues stemming from petrol seem to have remained largely stable, hardly any leaded petrol is sold in most OECD countries today. Second, there has been some increase in the revenues related to waste management. In a group of countries that levy taxes on the final handling of waste (Austria, Czech Republic, Denmark, Finland, Netherlands, Norway, Sweden and United Kingdom), the share of revenues from waste-related taxes in total revenue from environmentally related taxes increased from 0.7% in 1995 to 2.8% in 2005.

Comparisons of selected tax rates across countries

In the graps below, tax rates applied to selected tax-bases in the countries covered by the database are compared. For practical purposes, when a country apply a large number of different tax rates, the graphs only reflect a selected number of them. Please consult the database for further information.

By clicking on the respective graphs, you can see the underlying data -- and more information on the tax-base the rate applies to.

For most OECD countries, the graphs show tax rates valid as of 01.01.2009. However, for non-OECD member countries, the rates shown are as of 01.01.2007.

In case you should find any errors -- or any information missing -- in the graphs below, you are invited to send relevant corrections to Nils-Axel.Braathen@oecd.org.

Taxes on the landfilling of household waste

The graph below illustrates tax rates applied to the landfilling of household or municipal waste (or similar). In some countries, the tax rate depends on the environmental quality of the landfill. In these cases, the graph shows the tax rate that apply for landfills with the highest environmental quality.

It should, however, be kept in mind that efforts are being made in many countries to move away from the landfilling of household waste. Hence, in some countries, the tax rates shown here only apply to relatively minor waste quantities.

Taxes on emissions to air of NO_x

The graph below illustrates taxes applied to emissions to air of nitrous oxides, NO_x. As can be seen, there are very large variations in the tax rates applied between countries -- and, sometimes within a given country (i.a. with a zero rate applied in parts of a country). When interpreting these differences, it should be kept in mind that the environmental damage caused by a kg NO_x emitted varies much from place to place -- but not necessarily in line with the tax rate differences observed.