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Mapping objectives in the field of environmental taxation and budgetary reform: Environmentally Harmful Subsidies

The EU and its Member States have a long-standing commitment to phasing out EHS. The European Green Deal (EGD) is intended to “create the context for broad-based tax reforms, removing subsidies for fossil fuels, shifting the tax burden from labour to pollution, and taking into account social considerations.” This includes the intention to “redirect public investment, consumption and taxation to green priorities and away from harmful subsidies”. The EGD also commits Europe to living up to a green oath to “do no harm”.

Removing EHS needs to be part of greening any government budgets. The current pressure on government budgets (national or regional) from the COVID-19 crisis presents a need and an opportunity for governments to revise their budgets and cut expenditure or increase revenues, while supporting achievement of environmental and climate policy goals. The removal of EHS would cut deficits and may contribute to reduce CO2 emissions and other environmental impacts, while creating a level playing field in the markets.  

From a political and equity perspective, removing EHS can be a contentious and complex process. A “just transition” is indispensable for the acceptance and resilience of the reforms. 

VVA, RPA Europe, Bio Innovation Service, Metroeconomica and Vrije Universiteit Amsterdam are carrying out a study, supported by the European Parliament and implemented by the European Commission, aiming to serve as input to the political and societal debate on environmental reform and greening the governments’ budget. The study will explore the possibilities of well-designed phasing out of EHS and will provide evidence and supporting material for environmental fiscal reforms in the EU Member States and guidance for engagement of civil society in these reforms. 

The first stakeholder workshop was held online on 10 June 2021. Webinar recordings and slides are available here

 

The second stakeholder workshop was held on 15 November 2021. Slides are available for download here and webinar recordings below.