Environmental Fiscal Reform in Europe between 1990 and 2003
This paper by Chris Hewett and Paul Ekins is a review of the many different efforts across Europe, since the early 1990s to the pre-sent day, to implement EFR. It draws on the numerous academic studies as well as the practical experience of countries such as Sweden, Denmark, Germany, The Netherlands, UK and Ireland.
The concept of environmental fiscal reform (EFR), sometimes referred to as ecological fiscal reform, or green fiscal reform (GFR), has been an active area of policy research and implementation for three decades across Europe.
Broadly speaking, environmental fiscal reform uses environmental taxes and reduction of government expenditure harmful to the environment – fossil fuel subsidies are a prime example – to raise revenue. The proceeds, depending on the fiscal position of the country, can be used:
- To reduce other taxes, e.g. labour taxes;
- To reduce budget deficits;
- For specific purposes of investing in environmental infrastructure;
- To stimulate innovation in clean technology.