Environmental taxes can contribute to a healthier planet and healthier people. They also spur jobs and growth, are easy to administer and difficult to evade.

However, meeting EU climate and other environmental policy targets will erode the existing base for these sort of taxes. This and other systemic factors have implications for the design of future tax systems in Europe, according to an EEA report published today.

The report, ‘Environmental taxation and EU environmental policies’ gives an overview of market-based instruments (MBIs), such as taxes, recycling fees, polluter-pays schemes or emissions trading permits, created under EU environmental legislation. It also analyses the current design and application of environmental taxes in EEA member countries and considers future prospects.

The report stresses the value that environmental taxes play in decoupling pollution and resource use from economic development. For example, in Sweden, GDP has grown by 58% between 1990 and 2013 since the introduction of a carbon dioxide tax that contributed to a 23% reduction of greenhouse gas emissions over the same period.

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