Environmental taxes

Environmental pressure has increased in line with economic growth and in order to reduce the negative environmental effect and to use natural resources in a sustainable way, more attention is being paid to the environment related economic instruments (environmental taxes, tradable permits, etc.). Environmental taxes are economic instruments to facilitate the development of consumers’ and producers’ environment-friendly behaviour.

Environmental taxes are grouped into pollution taxes, resource taxes, energy taxes and transport taxes

The Statistical Office of the European Communities (Eurostat) regards all environment related taxes, charges, excises and state fees as environmental taxes. The base of an environmental tax is a physical unit (or a proxy of it) of something that has a proven specific negative impact on the environment. Environmental taxes are grouped into four categories: pollution taxes, resource taxes, energy taxes and transport taxes. (”Environmental Taxes — A Statistical Guide”, Eurostat, 2001.)

The waste disposal fee, air and water pollution fees and the packaging excise duty are the pollution taxes enforced in Estonia. Resource taxes include the water abstraction fee and the fishing fees. The fuel excise duty as well as the excise duty on electricity are grouped under the category of energy taxes. The heavy goods vehicle tax and the car registration fee refer to transport taxes. The fuel excise duty accounts for the largest part of total environmental taxes.

Figure. The revenues of environmental taxes in state and local budgets in Estonia, 2001–2007

Source: Eesti Statistika Kvartalikiri. 3/09. Quarterly Bulletin of Statistics Estonia.

Estonia has the smallest share of transport taxes in total environmental taxes in the European Union

Comparison of the total sum of Estonia’s environmental taxes and those of other Member States of the European Union reveals that, in Estonia, the share of environmental taxes in the GDP is on the average level of the European Union. Estonia’s structure of environmental taxes differs from that of other European Union countries — Estonia has the smallest share of transport taxes in total environmental taxes. Such transport taxes as the road tax or the annual tax on motor vehicle use which are common in other countries of the European Union have not yet been established in Estonia.

Figure. The share of environmental taxes in GDP in Member States of the European Union, 2007

Source: Eesti Statistika Kvartalikiri. 3/09. Quarterly Bulletin of Statistics Estonia.

Description of the methodology and the definitions are attached to the tables of the statistical database (see the link ”Definitions and Methodology”).