February 2015

Budapest Seminar Considers Scope for Environmental Fiscal Reform

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A major seminar, held on 4th February at the Ministry of Agriculture of the Hungarian Government, considered Eunomia’s findings regarding the scope for environmental fiscal reform.

Opened by the Secretary of State at the Ministry of Agriculture, Mr Zsolt V. Németh, and by Ion Codescu, head of the Unit with responsibility, in DG Environment, for the European Semester, the seminar  was attended by 70 or so people from Ministries, universities, NGOs and consultancies.

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Following a presentation from László Balogh, Deputy Secretary of State at the Ministry for National Economy, Eunomia’s Chairman, Dr Dominic Hogg, gave a presentation on the potential in Hungary for environmental fiscal reform.

The presentation, drawing on work undertaken for DG Environment which was published last year, highlighted potential changes in taxes on motor fuels, heating fuels and vehicles, the potential for new taxes on agrochemicals and aggregates, and the likely benefits from removing environmentally harmful subsidies.

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Dr Hogg commented:

These are suggestions for the Ministries to consider. The Government will decide whether these changes make sense to them. If all the measures we proposed were implemented, then subsidies equivalent to 1-1.7% of GDP could be removed, and taxes generating revenue equivalent to around 2.2% of GDP (in the longer-term) could be implemented.

The Government could consider whether to use the resulting savings from subsidy removal, and revenue generation, to reduce the relatively high labour taxes in Hungary, or to consolidate their fiscal position.

The full report is available from the Eunomia and the European Commission websites. Eunomia has also recently completed a study that extends the analysis to a further 14 member states.