Taxing Energy Use A GrAphicAl AnAlysis Taxation is one of the most important government policies affecting energy use and therefore the environmental problems (such as greenhouse gas emissions and air pollution) to which various forms of energy use can give rise. This report provides the first systematic comparative analysis of the structure and level of energy taxes in all OECD countries. It presents effective tax rates on energy use in terms of both energy Taxing Energy Use content and carbon emissions, together with detailed graphical profiles of both the structure of energy use and energy taxes in each country. It is a data-rich tool that will help policy makers and analysts to evaluate the role A GrAphicAl AnAlysis and impact of current energy tax settings and to plan potential reforms. The report offers comparative statistics on and graphical profiles of all 34 OECD countries: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States. Taxing Energy Use Energy Use Taxing A Gr A A phic A l An l A lysis Consult this publication on line at http://dx.doi.org/10.1787/9789264183933-en. This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org for more information. isbn 978-92-64-18125-0 23 2013 02 1 p -:HSTCQE=V]VWZU: Taxing Energy Use A GRAPHICAL ANALYSIS This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2013), Taxing Energy Use: A Graphical Analysis, OECD Publishing. http://dx.doi.org/10.1787/9789264183933-en ISBN 978-92-64-18125-0 (print) ISBN 978-92-64-18393-3 (PDF) The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Photo credits: Cover © keller - Fotolia.com © ARTENS - Fotolia.com © EpicStockMedia - Fotolia.com. Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD 2013 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgement of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected]. FOREWORD Foreword Energy generation, distribution and use is critical to modern economies, both as an input to industrial production and as an important element of consumer spending. At the same time, current patterns of energy generation and use contribute significantly to environmental problems such as climate change and air pollution. Taxation is one of the most important government policies affecting energy use. Indeed, the OECD’s Green Growth Strategy highlights the importance of pricing pollution through market- based mechanisms, such as taxes or tradable permit systems, and eliminating inefficient fossil-fuel subsidies. This report Taxing Energy Use: A Graphical Analysis provides for the first time a systematic comparative analysis of the structure and level of energy taxes in OECD countries. It contributes to a better understanding of the price signals conveyed by current tax systems to consumers of fuels. It presents effective tax rates in terms of both energy content and carbon emissions for the full range of energy sources and uses in each country, along with reported tax expenditures, the size of the relevant tax base in each case, and an illustration of the revenues raised or foregone. Our analysis illustrates substantial differences, both across and within countries, in the tax treatment of different forms, uses and users of energy. While in some cases tax rate differentials have clear justifications, in many other cases the rationale is less obvious. This is particularly notable where effective tax rates vary across energy products that are used for the same or similar purposes. Such variations, and the low levels of taxation on fuels with substantive environmental impacts, suggest an opportunity for countries to reform their energy tax systems to achieve their environmental, economic and social policy goals more cost-effectively. At the same time, there is an opportunity to raise additional revenues in an economically efficient way and to improve public finances. The profiles of energy taxation illustrated in this report are a data-rich tool that can help policy makers and analysts to evaluate the role and impact of current energy tax settings and to plan potential reforms. They are an important addition to the OECD toolkit of statistics, analyses and recommendations supporting country efforts to promote Green Growth. In short, it aims to support countries in promoting better and greener tax policies for better lives. Angel Gurría Secretary-General TAXING ENERGY USE: A GRAPHICAL ANALYSIS © OECD 2013 3 ACKNOWLEDGEMENTS Acknowledgements This report was prepared by staff of the OECD’s Centre for Tax Policy and Administration (CTPA) under the guidance of James Greene. The principal authors were Michelle Harding, Alastair Thomas, Chiara Martini (of the University of Roma Tre, who held the 2011-12 Alessandro Di Battista Fellowship in the CTPA) and James Greene. The underlying spreadsheet models were designed by Michelle Harding. An important authoring contribution was also made by Maria Grazia Pazienza of the University of Florence, who was a Visiting Research Scholar in the CTPA in 2012. Other staff in the OECD provided important feedback on the report during its various phases of development: Nils-Axel Braathen, Anthony Cox, Jens Lundsgaard, Stephen Matthews, Jehan Sauvage, Ronald Steenblik and Jagoda Sumicka. The report was discussed at various stages in its development by the OECD’s Joint Meetings of Tax and Environment Experts, and was approved for publication by the Committee on Fiscal Affairs and the Environment Policy Committee. Invaluable information, comments and other input concerning the report were provided by Delegates to the Joint Meetings and their colleagues in national and sub-national government administrations. 4 TAXING ENERGY USE: A GRAPHICAL ANALYSIS © OECD 2013 TABLE OF CONTENTS Table of contents Executive summary ......................................................... 11 PART I Overview Taxing energy use in OECD countries ......................................... 17 1. Introduction.............................................................. 18 2. Background .............................................................. 18 3. Structure of the maps, methodology and data sources ......................... 23 4. Energy use and taxation across OECD countries: Results from the analysis ........ 27 5. Conclusion ............................................................... 51 Notes...................................................................... 52 References ................................................................. 53 PART II Country profiles Australia .................................................................. 57 Austria .................................................................... 63 Belgium ................................................................... 67 Canada .................................................................... 73 Chile ...................................................................... 79 Czech Republic ............................................................. 85 Denmark .................................................................. 89 Estonia .................................................................... 93 Finland .................................................................... 97 France..................................................................... 101 Germany .................................................................. 107 Greece..................................................................... 113 Hungary ................................................................... 119 Iceland .................................................................... 123 Ireland .................................................................... 129 Israel...................................................................... 133 Italy....................................................................... 137 Japan.....................................................................