Environmental Taxes in the EU

18 Nov 2013

Environmental taxes have been found to be less detrimental to economic growth than labour or corporate taxes. They can also help to achieve environmental goals. While environmental taxes will never be substantial revenue raisers, they can provide a double dividend in terms of enhanced environmental performance.

The data suggest that Ireland raises significantly more in environmental taxes than the EU average with only Denmark, the Netherlands and Slovenia raising more revenue as a percentage of output.

Figure 1: Environmental Taxes (% of national output)

Source: Tax Reforms in EU Member States 2013, European Economy 5/2013 Table 3.10

Notes: includes taxes on energy, transport, pollution and resources (excluding VAT).

With regards to the taxation of energy, Ireland is ranked close to the EU average. The Implicit Energy Tax Rate is the ratio between total revenue from energy taxation and final energy consumption. By this measure, Ireland is ranked 11th out of the 27 EU countries.

Figure 2: Implicit Energy Tax Rates