The greening of taxes and public finance
Options for municipal and provincial authorities

Over the past 15 years there has been quite some ‘greening’ of the Dutch tax system, with environment-related taxes now (2004) accounting for some 14 per cent of total tax revenue. Most prominent among these is undoubtedly the Energy Tax escalator (the former Regulatory Energy Charge). Compared with the relatively keen interest shown in green taxes at the national level, though, interest at lower government levels has been modest and at best fragmentary. Against this background CE was commissioned by the Dutch Environment ministry (VROM) to perform a study on ‘devolved fiscal greening’.

The resultant report inventories new and existing options, assessing their environmental efficacy, practicability and likely support base. The advice can be seen as a ‘road map’ bringing some kind of structure to the broad range of options available, with local and provincial executives being in the best position to evaluate ultimate choices at their particular level.

Four specific measures were deemed most promising at the devolved level. One is to differentiate parking charges according to vehicle size and emission class. This measure can help reduce parking congestion as well as improve urban air quality. As a first step, councils might opt to differentiate the rates paid by permit-holders. A second option is to differentiate the rates paid for municipal refuse disposal, as is indeed already the case in one in four Dutch municipalities. Another route to ‘greening’ at the decentralised level is to include environmental considerations when granting concessions for regional and local transport, in the form of explicit criteria for vehicle emissions and so on. All municipal and provincial authorities are to be sent a circular by VROM detailing the green tax options available, leaving them free to decide which, if any, options are appropriate in their particular circumstances, given local preferences.

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