50


EMISSIONS GAP REPORT 2018 – BRIDGING THE GAP: FISCAL REFORMS FOR THE LOW-CARBON TRANSITION


Table 6.2: Options for revenue recycling. Recycling option


Reduce income taxes


Growth, employment


Objective(s)


Example(s)


• Germany (energy tax reform): A 1.7-percentage point reduction in compulsory public pension contributions increased employment by 0.6 percent (Bach et al., 2002; Welsch and Ehrenheim, 2004).


• Sweden (energy tax; carbon tax of €120): Revenues led to continued reductions of labour taxes; tax revenues comprise 1.6 percent of gross domestic product (GDP) and 3.6 percent of national tax revenues.


Cash transfers


Equity, popular support


• British Columbia, Canada (carbon tax of C$35 [€24] in 2018): up to C$135 [€92] per adult and C$40 [€27] per child in 2018.


• Alberta, Canada (carbon levy of C$30 [€21] in 2018): tax rebate (on average C$135 [€92] per inhabitant in 2018, dependent on income and family status).


• Switzerland (CO2 levy of CHF96 [€85] in 2018): Majority of


revenues recycled to citizens as a uniform transfer (CHF88 [€78] in 2018).


Investments, fostering structural change


Affected industry support


Growth, equity, popular support


Industry support, leakage avoidance, employment


Climate projects and low-carbon investment


Popular support,


sustainability


• Alberta, Canada (carbon levy of C$30 [€21] in 2018): Revenues spent on infrastructure, public transit and energy efficiency.


• Sweden (energy tax; carbon and energy tax of €120): Lower tax rate for industry, but tax reduction phased out over time and abolished in 2018.


• Switzerland (CO2 levy of CHF96 [€85] in 2018): subsidy for employed workers.


• Germany (energy tax reform): support of renewable energy and housing sector.


• Switzerland (CO2 levy of CHF96 [€85] in 2018): One third of


the revenues were allocated to helping reduce housing sector emissions and financing a low-carbon technology fund.


• British Columbia, Canada (carbon tax of C$35 [€24] in 2018): Used to finance a Clean Energy Fund and provide investment support for emission reductions projects.


• India (coal tax of INR400 [€5] per tonne of coal, approx. €2/tCO2


): Part of revenues used for clean energy and environment fund.


• Colombia (carbon tax of US$5 [€4]): Revenues spent on environmental and natural conservation projects.


Note: Carbon prices are per metric tonne of CO2 . Source: Own elaboration, based on information from ministries.


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