Environmental Fiscal Reform in Europe: Sustainable prosperity, growth and jobs

Environmental Fiscal Reform in Europe: Sustainable prosperity, growth and jobs

The European Union is at a crossroads, its model of social market economy under threat. The European economy will go through a fundamental transition in the coming years as it responds to the
challenges it currently faces.

  1. High budget deficits, average 3% of GDP, but 14 countries with much higher rates
  2. Rising government debt-to-GDP ratios, average 87% in the EU-28
  3. Slow GDP growth, averaging 1.4
  4. High youth unemployment – 21% in the EU-28 in September 2015, 49% in Greece, 47% in Spain
  5. Aging population –the proportion of persons aged 65 and over in the EU grew by 2.1% in the last decade, reaching 18.5% in 2014, and is predicted to reach 29% by 2080
  6. Climate change – UK MET Office data for 2015 so far shows that, for the first time, global mean temperature at the Earth’s surface is set to reach 1°C above pre-industrial levels

Environmental Fiscal Reform (EFR) covers a range of measures to bring tax and spend into line with environmental and climate goals. Measures include green taxes, tax shifting, environmental fees and charges, and the phase-out of spending harmful to the environment, e.g. fossil fuel subsidies. A very real political opportunity currently exists to make green taxes and reform of harmful subsidies key elements in Europe’s policy response to its current challenges – as explained in this policy brief.

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