Background
In March 2003 the newly elected Austrian government published its plans about Environmental Fiscal Reform (EFR). This was a surprise from an ecological point of view because the incumbent government's election campaign (Austrian People's Party and the Austrian Freedom Party) had not promised any EFR (ÖGUT, April 2003).
Environmental Fiscal Reform is a broader approach than Environmental Tax Reform; it not only focuses on ‘shifting taxes from economic functions, sometimes called ‘goods', such as labour (personal income tax), capital (corporate income tax) and consumption (VAT and other indirect taxes), to activities that lead to environmental pressures and natural resource use, sometimes called ‘bads', but also on reforming economically motivated subsidies, some of which are harmful to the environment and may have outlived their rational. EFR is a more recent development than ETR and offers more opportunities for progress, and is more in line with the ‘polluter pays' principle and the concept of sustainable development', (EEA, 2005: 84).
Design
Coverage
The ecological elements are a tax on coal, a rise in the tax on mineral oil (gasoline- unleaded petrol, diesel and heating oil) and a rise in the tax on natural gas. Other environmental taxes/charges include a tax on electricity, a land contamination Vienna charge for tree protection, a waste deposit levy, a motor vehicle tax, a tax on motor vehicle insurance, a road transport duty and a safety levy (air passengers).
Tax Rates
The Austrian EFR was announced as part of a bigger tax reform due to take place in two steps in 2004 and 2005. In 2004, energy taxes increased by €400 million realised through new taxation laws for coal and an increase of taxation for fossil fuels.
The second step in 2005 aimed at cutting taxes by €2.5 billion in total, of which approximately 50% would fall away from the tax bills of employees and companies. The main aim in this second phase of tax reform was to reduce the tax burden for the taxpayer and improve the competitiveness of Austrian industry in an enlarged Europe, but not shift the tax burden towards the environment (Greisberger, 2004).
The 2005 proposal represented a step back from the tax reform of 2004; it included an increase in commuter allowances of €20 million (i.e., an increase of 15%) and a reduction of the energy tax for diesel used in agriculture of €50 million per year. The proposal did not include any reduction of environmentally counterproductive subsidies (Greisberger, 2004).
Rates- as at July 2005 (unless otherwise stated)
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Energy Taxes
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Tax on mineral oils
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Diesel, with sulphur content: a) below 10mg/kg b) above 10mg/kg
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a) €0.30/ litre b) €0.32/litre
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Heavy fuel oil
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€600/1000kg
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Leaded Petrol
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€0.50/litre
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Light fuel oil
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€98/1000litre
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Unleaded petrol with sulphur content
a) below 10mg/kg b) above 10mg/kg
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a) €0.42/litre b) €0.43/litre
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Coal consumption tax
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€0.05/kg
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Electricity consumption
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€15/MWh
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Natural Gas consumption
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€66/1000m3
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Pollution taxes
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Waste deposit Levy
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€7.20/tonne - €123.00/tonne depending on type of waste and land-fill
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Transport Taxes
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Motor Vehicle tax
Motor related insurance tax
Vehicle Registration Tax
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Varies. Depends on type of vehicle, weight and engine size - see OECD database on Environmental Taxes Website.
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Duty on vehicles based on fuel consumption . (NOVA)
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Average fuel consumption related rates (max 16% in 2002); in the case of motorcycles a cylinder capacity related rate is applied.
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Road transport duty
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The use of lorries and trailers with a total max weight larger than 12 tonnes on Austrian roads (€5.82/day; € 31.99/week; € 121.43/month; € 1214.26/year).
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Resource Tax
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Land tax (real estate transfer tax B)
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Basic rate 2.7% and multipliers of the order of 0.8% of standard value (2002).
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Land Tax (transfer tax)
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Normally 3.5%, 2% in the case of sales to relatives.
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Duty for hunting and fishing
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Hunting and Fishing Licences
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Viennese Tree Protection charge
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Trees with more than 40cm circumference that are cut down, if no new plantings are carried out: €1090/tree
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Fees for the export and import of animals and plants
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Issuance of permits and certificates vary in price depending on animal type: €7.25/unit - €218.00/unit
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Subsidiary account (environmentally relevant payments)
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Tolls for mountain roads
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Varies according to the distance covered, type of vehicle and number of seats.
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Parking Duty for Vehicles (Vienna)
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Parking time spent in limited parking zones
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Vienna Waste Collection Charges
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Using a 110 or 120 bin: €3.16/bin. Using a 220 or a 240 bin: €3.32 /bin.
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Waste Disposal Levy
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Paid to Federal Government. €5.80 to €101.60 per tonne (2002).
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Waste Disposal Charges
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Paid to Local Authority. Up to €2.91 per cubic metre of waste (2002).
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Wastewater Charges
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Water consumption of households and enterprises; household size or lump-sum charge: €58 to € 487 per year for an average source,
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Water Charges
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Varies according to difference forms of calculation used.
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Motorway Toll
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Varies according to the distance covered, type of vehicle and number of seats.
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Kilometre Tax
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Introduced 2004. Applies to vehicles over 3.5 tonnes on motorways only. Charge for a 40 tonne vehicle is €0.22/km, which covers road infrastructure only. The charge has been a success in bringing in revenue (€740m/annum) but has not succeeded in reducing traffic levels, on transit stretches traffic levels have increased. The level of heavy goods traffic has also increased on non-motorway roads.
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Tourism Tax
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Overnight stays in commercial accommodation, in caravans parked on a campsite for more than two months of the holiday season, rates between €0.15 and €2.18 per night (varies across regions) in 2002.
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Source: Rainer (2005), OECD (2005) and European Commission (2002)
Refunds
In addition to those taxes, a small relief in additional wage costs is part of the reform: the lowest wages (up to €1,035/month) will have wage taxes completely lifted. At the same time, part of the additional wage costs will be reduced. Companies and industry will also be given relief.
Performance
Accordingt to the Minister of Finance, Karl-Heinz Grasser, expectation of environmental tax revenue far exceeded expectations. The expected tax revenues for 2004 was €335 million, for 2005: €357 million and 2006: €357 million. Listed in the table below is the tax revenue received.
Environmental Tax Revenue - (according to EU/OECD definition).
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Millions of Euros
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1999
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2000
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2001
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2002
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2003
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2004
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Energy Taxes
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Tax on mineral oils
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2695
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2726
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2880
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3109
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3310
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3594
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Electricity and natural gas charges
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405
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562
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754
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692
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699
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736
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Total Energy Taxes
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3100
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3288
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3634
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3801
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4009
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4330
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Pollution taxes
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|
|
|
|
|
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Waste deposit Levy
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64
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71
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89
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93
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97
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57
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Landfill site charge
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1
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1
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0
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0
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0
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Total Pollution Taxes
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65
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72
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89
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93
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97
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57
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Transport Taxes
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Motor Vehicle tax
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129
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132
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166
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201
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207
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166
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Motor related insurance tax
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719
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975
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1117
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1185
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1217
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1251
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Duty on vehicles based on fuel consumption
(NOVA)
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438
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433
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421
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417
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459
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477
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Road transport duty
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77
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84
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86
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88
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86
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-
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Total Transport Taxes
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1363
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1624
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1790
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1891
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1969
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1894
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Resource Tax
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Land tax (real estate B)
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425
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434
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451
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464
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484
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Duty for hunting and fishing
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9
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10
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9
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9
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11
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Viennese Tree Protection charge
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1
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1
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2
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1
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1
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Landscape protection and nature conservation
Charge
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6
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6
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6
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7
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8
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Fees for the export and import of animals and
Plants
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0.15
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Total Resource Taxes
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441
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451
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468
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481
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504
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Total Eco taxes (Standard National Accounts)
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4968
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5436
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5982
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6266
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6579
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Subsidiary account (environmentally relevant payments)
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Tolls for mountain roads
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1
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1
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Parking Duty for Vehicles (Vienna)
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41
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43
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47
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42
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42
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Waste Charges
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334
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426
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446
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448
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479
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Wastewater Charges
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721
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808
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841
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849
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892
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Water Charges
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327
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351
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365
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364
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375
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Motorway Toll
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191
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200
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307
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310
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314
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Source: Statistics Austria (2005). Figures for 2004 are from the OECD/EEA database.
In 2003 (most recent year with full dataset), environmental tax revenues totalled € 6,579 million, an increase of 5% on 2002. Over the four years to 2003, they have risen by about 32%. There has been a slowdown in growth over the last few years (2000: 9.4%, 2001: 10%, 2002: 4.8%) mainly due to a decrease in revenues from energy taxes (Huber-Bachmann, 2004).
Energy taxes (tax on mineral oils, electricity and natural gas charges) comprise the largest share of environmental taxes. In 2004, €4,330 million was collected; an increase of 8% on 2003 figures. Taxes on mineral oils have been increasing at a pedestrian pace since 1999, they account for the bulk of energy taxes (83% in 2004). Electricity and natural gas charges peaked in 2001, fell by 8% in 2002 but are on the increase again. Energy taxes account for approximately 61% of all environmental taxes collected; this share has been maintained since 1999 (Huber-Bachmann, 2004). This also suggests that total environmental tax revenues probably increased at around 5% on 2003.
Transport taxes form the second largest category of environmental taxes. Receipts in 2003 totalled €1,969 million; 4.1% more than in 2002. Their share has been hovering around 30% of total environmental revenue since 2000. Transport taxes are less significant in the EU, accounting for less than 20% of tax revenues. On closer analysis, one can see that the 2.7% increase in the engine size-related insurance tax in 2003 is the lowest rate of growth over since 1999 (Huber-Bachmann, 2004).
Receipts from resource taxes - consisting primarily of tax on real estate - totalled €484 million in 2003, a 4% increase on 2002 (€464 million). Resource taxes are of negligible significance in the EU (less than 3% of total environmental taxes in 2001) in contrast to Austria where they account for nearly 8% of the total (Huber-Bachmann, 2004).
Pollution taxes, made up largely of the levy on dangerous waste, form the smallest category of environmental taxes in Austria, accounting for just 1.5% of the total. In its environmental policy, Austria has successfully relied on regulatory measures (statutory bans) to prevent pollution by hazardous substances and thus exercises more restraint in imposing tax measures in this area. The receipts from a levy on dangerous waste dropped by 41% in 2004, having steadily been on the increase since 1999. This tax is levied per tonne of waste deposited in landfills. Eighty-five percent of receipts are earmarked to fund safety and clean-up measures and fifteen percent to finance tests on contaminated sites and sites suspected of being contaminated.
The increase in pollution taxes up to 2003 are attributable to the new technology used at a given landfill where the quality of waste deposited is assessed and no longer levied solely on the basis of waste type. There are additional charges for landfills with insufficient cover and inadequate landfill gas containment (Huber-Bachmann, 2004).
Water, sewage and waste-disposal charges are the most significant payments of environmental relevance. Many countries use tax instruments to curb the amount of waste generated while Austria utilises charges and has not yet fully exhausted the possibilities of this instrument. In terms of charge revenues, waste-disposal and sewage charges have been on the rise in recent years while water charges have stagnated (Huber-Bachmann, 2004).
References
Austrian Society for Environment and Technology (ÖGUT), 2003, April 2003. Web document available at: http://www.bmf.gv.at/steuern/NeueGesetze/
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