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ETR in Finland

ETR in Finland. International seminar on Ecological Tax Reform (ETR) 11.4.2006 Tallinn Erja Heino The Finnish Association for Nature Conservation (FANC) erja.heino@sll.fi. International.

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ETR in Finland

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  1. ETR in Finland International seminar on Ecological Tax Reform (ETR) 11.4.2006 Tallinn Erja Heino The Finnish Association for Nature Conservation (FANC) erja.heino@sll.fi International

  2. High income taxHigh employers’ social contributionsFew environmental taxes and concentrated on energy and trafficNon-existing taxation on (other) natural resource use Environmentally related taxes 3,2 % of GNP (3,4 % in 1998) Playfield

  3. BUTMain change so far: large income tax reductions.No new environmentally related taxes.Some environmental taxes even lowered like tax on beverage packaging.Finland delivered all emission allowances free of charge. ETR in governments programme

  4. 1998 2000 2002 2004 2005 A A A B BP Alcoholic beverage surtax 10 12 20 20 - Soft drinks surtax 2 1 2 2 - Drinks packaging tax - - - - 13 Pesticide fee 2 2 2 2 2 Energy taxes 2,572 2,268 2 ,756 2,990 3,010 Oil waste tax 3 3 4 3 3 Motor vehicle tax 884 1,058 1,023 1,020 1,294 Oil pollution control fee 6 5 6 9 9 Vehicle licence tax 201 219 446 513 536 Diesel tax 175 181 - - - Waste tax 31 33 32 49 53 Total 3,886 3,784 4,291 4,608 4,920 GDP Fiscal income from environmentally related taxes in Finland (million EUR) 115,596 130,145 139,803 147,713 153,762 Environmental tax revenues as a percen t age of GDP 3.4 2.9 3.1 3.1 3.2 Note: A = Final accounts, B = Budget, BP = Budget proposal http://www.stat.fi/tup/tiedotteet/v2004/198ympe.html Source: Statistic Finland

  5. Finland first to introduce CO2 tax in 1990 (fuel oils, natural gas, coal and electricity)In 1994 changed to an energy and CO2 tax, carbon content defined 75 %, energy content 25 %, reduced tax on natural gas From 1997 CO2 tax again a 100 % carbon tax, but only on heat production, for peat reduced taxIn 1998 refund scheme for energy intensive industries: 10-12 companies, mainly pulp and paper get itToday CO2 tax is the most dominant (half)of various duties on fossil fuelsIn 2005 CO2 tax on peat was abolished Energy related taxes: CO2

  6. From1993 basic excise tax on mineral oilsFrom 1994 precautionary stock fee and oil pollution fee on fossil fuels  minor meaning From 1997 excise tax only on light fuel oil Excise tax and other fees on fuels

  7. Tax rebate on renewable grants appr. 50 million EUR to renewable energy producers.33 million investment aid for renewable energy year 2002, firstly for wood energy, second wind 10 million R&D aid to renewable energy technologies in 2003 Emission trading: all emission allowances delivered free of charge Energy companies profited for this in 2005:Pohjolan voima 56 milion EUR, Fortum 25, Helsinki Energy 13 Energypolicy and ETR

  8. Excise duty on electricity consumption (Eurcent/kWh) before 1997 the production was taxed, now consumption taxed o cent/kWh) Source: IEA., 2004, and IEA, 2005

  9. Waste tax on waste delivered to municipal landfills from year 1996 15 EUR/tonne from year 2005 30 EUR/tonneNo tax to waste incineration or private landfills resulted in popularity of incineration and distorts the waste treatment markets Tax on waste

  10. Tax on non-refillable beverage containers since 1993 + compulsory deposit system. the amount of packaging waste in Finland is approximately half of the average in EU countries2005 a reduced charge on recycled one way packaging 0,085 EUR/litrenon recycled 0,51 EUR/litreCharge for recycled beverage packaging will be removed  resulted already in growth of beverage packaging waste, in the long run reusable plastic bottles will be replaced by one way bottles. Packaging taxation

  11. New taxes on the use of natural resources:gravel materials, water, metals, oil, etc.New/enlargened taxes one way or short live –products like packing, napkins, one way battery Waste to industry landfills and incineration Road transportation Nuclear power SO2, NOx AdvertisementNitrogen and phosphorus ETR proposals of FANC ETR proposal of FANC

  12. Reduce taxation and costs:- income tax- VAT on renting, repairing, maintenance and leasing services- employers social contributions on services- of all bio fuels (biodiesel, -ethanol) used in traffic- VAT on eg. ecolabelled products ETR proposals of FANC

  13. Reduce harmful subsidies, for instance- on agriculture and forestry- on energy investments for non-renewable like peat and waste- exemption for commuter costs - deduction of company carNew instruments- feed-in tariff needed for wind and solar energy, but is offered for peat = electricity companies have to sell certain amount of electricity produced of peat ETR proposals of FANC

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