This study presents proposals for (a package of) green taxes that the Flemish government could implement to efficiently and cost-effectively ‘green’ the tax system and calculates the resultant impact. Because Flanders has high labour taxes and low taxes on environmentally damaging activities compared with other parts of the EU, changes in these two areas would bring major benefits.
Throughout the analysis, scope was sought for compensating higher environmental taxes by lowering other taxes, often referred to as ‘tax recycling’. The three scenarios differ in their focus and have different impacts. The ‘producers scenario’ aims to reduce energy and materials consumption, with recycling occurring through a reduction in corporate tax. The ‘consumers scenario’ taxes environmentally damaging forms of consumption, with compensation via lower income tax. The ‘Flemish scenario’ is geared primarily to increasing green tax revenues, with an accompanying decrease in both corporate and income tax.