A snapshot on Denmark's Pollution Taxes for a sustainable environment

1. Environmental Taxes in Denmark
Deepankar Kapoor
MBM 2011-13
Department of Business Management,
University of Calcutta

2. Denmark
• Scandinavian country in North
Europe
• Constitutional Monarchy with a
parliamentary system of
government
• Member of EU since 1973
• Mixed market capitalist economy
• Ranks as the World’s highest level
of income quality

3. Environment Taxes – 3 General Groups

4. Finer Details

5. Taxes on Motor Fuels
shown in terms of the highest tax rates by setting the tax rate applied in the UK equals 100

7. CO2 and SO2 Taxes

8. Air Pollution and Transport Taxes –
Annual Motor Vehicle Tax (AMVT)

9. Water Related Taxes & Charges
• Water services, like • The tax is levied on water
provision of drinking water delivery of up to a
and wastewater treatment, maximum of 300 m3 per
are subject to VAT. connection per year and the
• But the VAT rates applied in aim of the tax is to give a
the different countries differ price signal for water
in the sense that some saving.
countries levy the standard • Denmark has implemented
VAT rate on the user this type of tax so far, in
charges (for example, 1994, with only households
Sweden, Denmark and subject to the tax payment.
Finland) compared to a
reduced VAT rate in other
countries like Belgium,
Germany and France.

10. Waste Taxes
• Different types of wastes can be subject
to varied tax rates (Austria and
Switzerland) and the rates can also
depend on the type of waste disposal.
• In Denmark the tax rates for waste
delivered to an incinerator depend on
energy recovery.
• Waste Management Policy assesses landfilling as
the least desired option and prefers waste recycling compared to
incineration which is seen as the second least desired option, by
considering the incentive effect of a tax: the recyclable stream of
waste is subject to a tax rate of zero, incineration of waste is subject
to a tax rate of more than 6.2 EUR /tonne.

11. Other Eco Taxes

12. Taxes/ Country and Country and Country and
charges Revenue Use Revenue Use
Revenue use
1) NOX S E F
taxes and Refunded to useful energy
production of
firms on basis of Fund for environmental
restoration (5% of revenues) –
Abatement (66%) and monitoring
(17%) equipment and R&D
charges remainder to general budget (10%)
2) Water NL DK E
abstraction General budget General budget Recovery of costs of water
infrastructure
charges
3) Waste DK NL D
Water General budget, though a Hypothecated for identification Recycled for investments in
substantial sum was devoted to and funding of investments in sewage treatment plants
Charges an independent Water Fund, to sewage treatment plants
finance projects which protect
groundwater resources
4) S DK B
Pesticides General budget Initially 55% of revenues were Eco-tax: state budget
used to reduce county land tax, New pesticides charge:
Taxes and and around 10% was channelled Used to fund registrations etc.
Charges back to farmers via support to
organic farming. The remaining
35% of the revenue was used on
research and on monitoring of
pesticides in the environment
5) Mineral NL FIN S
Surpluses General budget Export subsidies Environmental charge: research
and environmentally related
and projects.
Fertiliser Since 1994: state budget, but
earmarked for environmental
improvements in agriculture.
6) Landfill F A
taxes Recycled to municipalities via Tax credits used to support Clean-up of contaminated sites
funds/ investments and to a environmental projects and recycling to landfill sites for
lesser extent, private (waste) environmental investments Source: ECOTEC 2000
sector & research activities A – Austria, B – Belgium,
DM – Denmark,
7) DK S FN – Finland,
Aggregates General budget General budget New sustainability fund
NL – the Netherlands,
Tax
NO – Norway,
8) FIN DK S
Packaging National Exchequer National Exchequer National Exchequer SW – Sweden,
Taxes SL – Switzerland,
9) Batteries I B HU UK – the United Kingdom
Taxes Revenue used to finance No information given Environmental protection.
collection of batteries

13. Per cent of GDP
A
0
1
2
3
4
5
6
us
t
ri
Cz Be a
ec lg
h iu
Re m
pu
b
De lic
nm
ar
Fi k
nl
an
d
Fr
an
G ce
per cent of GDP
er
m
an
y
G
re
e
Hu c e
ng
ar
y
Ire
la
nd
Ne It
th aly
er
la
nd
No s
rw
ay
Po
la
n
Po d
rtu
ga
l
Sp
a
Sw in
Sw ed
en
itz
er
al
nd
UK
1999
1997
1995
Revenues from environmentally related taxes in
Source: OECD, Environmentally related taxes database

14. Per cent of total tax revenue
Au
0
2
4
6
8
10
12
14
s t
C
ze Be ria
ch lgi
R um
ep
u
D bl i
en c
m
a
Fi rk
nl
an
Fr d
a
G n ce
er
m
a
G ny
re
e
H ce
un
ga
Ire ry
la
nd
N
et
he Italy
per cent of total tax revenue
rl a
n
N ds
or
w
Po ay
la
Po nd
rtu
ga
Sp l
Sw ain
Sw ed
itz en
er
al
nd
U
K
1999
1997
1995
Revenues from environmentally related taxes in
Source: OECD, Environmentally related taxes database

15. $US
A
200
400
600
800
0
1000
1200
1400
1600
1800
us
rt
Cz Be ia
ec l
h gium
Re
pu
b
per capita
De lic
nm
ar
Fi k
nl
an
Fr d
an
G c
er e
m
an
G y
re
e
Hu c e
ng
ar
y
Ire
la
nd
Ne I
th taly
er
la
nd
No s
rw
ay
Po
la
n
Po d
r tu
ga
l
Sp
a
Sw in
Sw ed
itz en
er
al
nd
UK
1999
1997
1995
Revenues from environmentally related taxes
Source: OECD, Environmentally related taxes database

16. Tax Shift in Denmark
COUNTRY TAX SHIFT REVENUE
SHIFTED
FROM TO % OF TOTAL
TAX REVENUE
OR TAX
REVENUE
Denmark 1993, Personal Income, Various (electricity, 2.5
1995 and 19982 Employers’ Social water, waste, cars), CO2 (2.4 bil DKR; 340 mil
Security Contributions, and SO2 EUR in 2000)
Investment Incentives
Sources: Recent Trends in the Application of Economic Instruments in EU Member States plus
Norway and Switzerland, S. Speck, P. Ekins, Forum for the Future, London, July 2000

17. Thank You
Bibliography:
‘ENVIRONMENTAL TAXATION: THE EUROPEAN EXPERIENCE’ by Agnieszka
Laskowska and Frank Scrimgeour, Department of Economics, University of Waikato.