{{Taxation
A steering tax or ecological incentive tax is a tax which aims to change the behaviour of the tax payer, as defined by lawmakers, and not particularly to increase tax revenue. The term is not sharply definable because many tax related laws influence buyer behaviour which is not always a wanted effect ( compensation reaction). The
Pigovian tax
A Pigouvian tax (also spelled Pigovian tax) is a tax on any market activity that generates negative externalities (i.e., external costs incurred by third parties that are not included in the market price). It is a method that tries to internal ...
is a special case of a steering tax to avoid
negative Externality
In economics, an externality is an indirect cost (external cost) or indirect benefit (external benefit) to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced ...
. An
ecological tax reform
An environmental tax, ecotax (short for ecological taxation), or green tax is a tax levied on activities which are considered to be harmful to the environment and is intended to promote environmentally friendly alternatives via economic incentive ...
is often understood to refer to the introduction of a steering tax on energy use, according to the
Polluter pays principle
In environmental law, the polluter pays principle is enacted to make the Party (law), party responsible for producing pollution responsible for paying for the damage done to the natural environment. This principle has also been used to put the cos ...
Federal Department of Environment, Transport, Energy and Communications
The Federal Department of Environment, Transport, Energy and Communications (DETEC, , , , ) is one of the seven departments of the Swiss federal government, headed by a member of the Swiss Federal Council.
Organisation
The department is compos ...
– Bundesamt für Umwelt (Nummer UW-0710-D), Bern. (35 pages, German text, abstracts in English, French and Italien).
In other languages incentive taxes (or fees) are known as "'' de:Lenkungsabgabe''" or "''Lenkungs-Steuer''" (Switzerland). Some of the eco-taxes ("Ökosteuer") in Germany and Austria are also steering taxes, in the sense of the originally intended Eco-social market economy.
The vehicle Excise Duty in Germany is an example of a steering tax. It is formulated in such a way that there is an incentive to invest in a new car which is as low polluting as possible. Cars with larger pollutant emissions pay a high tax compared to less polluting cars.
Electric car
An electric car or electric vehicle (EV) is a passenger car, passenger automobile that is propelled by an electric motor, electric traction motor, using electrical energy as the primary source of propulsion. The term normally refers to a p ...
s are tax free. In Germany and Switzerland it is legally clarified that the tax revenues should be used to promulgate, or "steer", the targeted behaviour change. The increase of earnings may be as long secondary aim as the rule has an objective earning relevance. This means that the tax may be as long be valid as a tax earning can be expected to take place and therefore the steering effect is justified.
If the aim of steering the payer's behaviour is successful, this means that the aim to increase tax revenues will be unsuccessful. The yield of tax revenue is reduced if the tax payers behave in the targeted way. For example, the consumption of cigarettes was quickly significantly reduced in Germany in 2004 by the increase of the tobacco tax.
Redistribution of steering taxes to consumers and economy
There are also steering taxes like the de:Swiss VOC-fee (''Incentive Tax on
Volatile Organic Compounds
Volatile organic compounds (VOCs) are organic compounds that have a high vapor pressure at room temperature. They are common and exist in a variety of settings and products, not limited to house mold, upholstered furniture, arts and crafts sup ...
''),
The Federal Authorities of the Swiss Confederation (12 November 1997) "Incentive Tax on Volatile Organic Compounds", SR 814.018 status 1 January 2012."Incentive Tax on Volatile Organic Compounds" United Nations Conference on Sustainable Development (
Rio+20
Rio or Río is the Portuguese and Spanish word for "river". The word also exists in Italian, but is largely obsolete and used in a poetical or literary context to mean "stream".
Rio, RIO or Río may also refer to:
Places United States
* Rio, Fl ...
).
which will be completely distributed amongst the population."Distribution of VOC-Tax-Revenues to the Swiss population" Art. 23 of SR 814.018, The Federal Authorities of the Swiss Confederation.
In this case there is no aim to increase tax revenues at all. The ideal goal of such a refund is the creation of positive incentives: People will be rewarded when they behave in the wanted way. If, for example they reduce the emission of greenhouse gases or environmentally dangerous pollutants and reduce their
Ecological footprint
The ecological footprint measures human demand on natural capital, i.e. the quantity of nature it takes to support people and their economies. It tracks human demand on nature through an ecological accounting system. The accounts contrast the biolo ...
, they get back an ecological bonus (German: ''Ökobonus''), because with the consumption of non-taxed environmentally friendly products, they pay less eco-taxes than the Green-Cheque is per capita: The amount of the eco-bonus is independent from the energy consumption of the individual recipients. In the words of a publication of the
European Environment Agency
The European Environment Agency (EEA) is the agency of the European Union (EU) which provides independent information on the environment.
Definition
The European Environment Agency (EEA) is the agency of the European Union (EU) which provides ...
: “A Swiss study (INFRAS/ECOPLAN, 1998), which investigated the economic and social impacts of different energy tax schemes, showed that redistributing revenues in the form of a ''per capita bonus'' is the most progressive option for an Environmental-tax-reform and creates the most beneficial social effects, although it leads to slightly negative effects on economic development.”"Environmental tax reform in Europe: implications for income distribution" European Environment Agency, Technical report No 16/2011, (retrieved 13 June 2013).
The repayment of steering taxes is often named fiscal subsidy. If this is accurate depends if one believes a steering tax is used solely as a direct transfer of public funds to private persons, or if they are seen as a relinquishment of state earnings to realize
Fiscal neutrality
In economics, the excess burden of taxation is one of the economic losses that society suffers as the result of taxes or subsidies. Economic theory posits that distortions change the amount and type of economic behavior from that which would oc ...
for this market-based environmental policy instrument. The official wording of the German federal government for such a revenue abstinence is "subsidy related matters of fact".
"19. Subventionsbericht der Bundesregierung" Bundestagsdrucksache 15/1536 (PDF; 2,6 MB), S. 16) (German).
“The recycling r redistribution of steering tax-revenues is especially important for the acceptability, and equity of the tax reforms.” But a difficulty for the political system is, that Opinion polls have shown that the redistribution aspect of eco-taxes “is very poorly understood by a large majority of the population.“
See also
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Carbon fee and dividend
A carbon fee and dividend or climate income is a system to reduce carbon emissions, greenhouse gas emissions and address climate change. The system imposes a carbon tax on the sale of fossil fuels, and then distributes the revenue of this tax ...
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Ecotax
An environmental tax, ecotax (short for ecological taxation), or green tax is a tax levied on activities which are considered to be harmful to the environment and is intended to promote environmentally friendly alternatives via economic incentive ...