The first step of Germany Germany
Road Fuels: 3.07 cents/liter
Heavy Heating Oils: 17.89 cents/ton; increase of 2.56 on existing heavy oil for heating tax, decrease of 10.23 on existing heavy oil for electricity generation tax
Electricity: 1.02 cents/kWh
Light Heating Oils: Increased 2.05 cents/liter; from 4.09 to 6.14 cents/liter
Natural Gas: Increased 0.17 cents/kWh; from 0.18 to 0.35 cents/liter
Between 2000 and 2003 the remaining steps of Germany’s ETR were implemented in the second law, entitled “Law of Continuation of the ETR,” starting on January 1 2000, further increases occurred after the government was re-elected in 2002, consisting of:
-Increases in the mineral oil taxes on transport fuels (petroleum and diesel) by 3.0 cents/year (2000), differential by sulfuric content as of November 2001
-Further increases in the taxes on natural gases by 0.55 cents/kWh (2002) and light heating fuels by 22.26 euro/1000 kilogram, from 38.34 to 60.60 euro/metric ton
-Increases in the taxes on heavy heating oils 7.11 euro/metric ton from 17.89 to 25 euro/metric ton
-Increases in the electricity tax by 0.26 cents/year
-Increases in the mineral oil taxes on transport fuels (petroleum and diesel) by 3.0 cents/year (2000), differential by sulfuric content as of November 2001
-Further increases in the taxes on natural gases by 0.55 cents/kWh (2002) and light heating fuels by 22.26 euro/1000 kilogram, from 38.34 to 60.60 euro/metric ton
-Increases in the taxes on heavy heating oils 7.11 euro/metric ton from 17.89 to 25 euro/metric ton
-Increases in the electricity tax by 0.26 cents/year
Energy tax rates (besides those on transport fuels) and their subsequent increases were lower for manufacturing and agricultural sectors due to concerns about international competitiveness, but Germany did include them in their taxation increase, and reduced their originally promised taxation exemptions by half, and the optional, complete exemption[3] from 100% to 95% of the positive difference between added costs of taxes and added revenue from a reduction in social security contributions in the major subsidy and exemption reduction legislation, “The Act on the Further Development of the Ecological Tax Reform , which entered into force on January 1st, 2003. Speck writes that the original optional full exemptions basically resulted in “the majority of German industries [having] an effective marginal tax rate of zero percent,[4]” (brought to 3% in 2003) and the normally exempted industries paying an effective marginal tax rate of 20%, which, when the partial exemption was reduced from 80% to 40%, brought their rate to 60% in 2003. There were also partial exemptions in the above specified taxation categories, the most significant being a 50% discount for electricity and mineral oil consumed in public transportation, and a 80% discount for mineral oils and natural gas in power stations, as well as some “exemptions for environmentally efficient technologies,[5]” including cogeneration power and heat plants, night storage heaters in households, more environmentally friendly transport fuels (such as natural gas and bio fuels)[6], and efficient gas-steam power plants.[7]
In 2004, after much discussion and political posturing, the German government instituted policy to further reduce environmentally harmful subsidies and exemptions.[8] This predominantly consisted on a “lawnmower method” of subsidy reduction, where all subsidies and exemptions are reduced by a uniform rate without regard for political preference, but did not follow this method exclusively.[9] Among those subsidies/exemptions reduced, were:
-the commuter distance-based deduction to a uniform rate of 30 cents/kilometer of commuting distance
-premium for owner-occupied homes reduced by 30% and extended to cover both existing and newly built homes
-the subsidy for liquid petroleum gas used as fuel was reduced by 12%, resulting in a new tax rate of 18.032 cents/kilogram
-the subsidy for liquid petroleum gas used as fuel was reduced by 12%, resulting in a new tax rate of 18.032 cents/kilogram
-the mineral-oil tax on natural gas used as a fuel was increased by 12 % to 1.39 cents/kWh
-the 50% reduced taxed rate of 1.02 cents/kWh for public railway and trolley bus transportation was increased by 12% to 1.142 cents/kWh
-exemptions for local public transportation was decreased by 12% as well, to an effective rate of 9.938 cents/liter.[10]
-in the 2003 legislation, all tax increases were frozen, and have remained constant since; when accounting for inflation, we see a slight drop real in tax rates.
The total ETR induced revenues of 18.7 billion Euro, comprised approximately one third of the total “environmental tax revenues,” the rest of which were already included in
Overall, transport fuels consisted the biggest share of the ETR revenue, consisting of 53.5% of the total, or 10 billion Euro, in 2003.[13] The reintroduced and reinvigorated electricity tax amounted to 6.5 million Euro, or 34.7% of the total, out of the remaining 12%, the tax on natural gas contributed a significant amount, and the taxes on light and heavy oil were almost negligible.[14]
Moving forward, the German government coalition has put the ETR efforts in the context of a larger environmental fiscal reform, (EFR). On the most important aspects of this is the dismantling of environmentally harmful subsidies and tax breaks that aren’t part of the existing ETR. Coal is perhaps the most notable of these, requiring the government to pay up to 2.5 billion Euro annually[15], and is subject to reevaluation in 2012, with recent discussion mentioning a potential 2018 end date. Additionally, the government has passed several measures since 2004 that will help make Germany’s ETR more of a EFR, including: a reduction the VAT rate for passenger rail transport from 16% to 7% in 2005, a compete abolition of the VAT exemption for air travel between Germany and other European Union countries, an extension of kerosene taxation, further development of the motor vehicle tax, based on CO2 emissions, and support for building zero energy, “passive houses,” initially for 30,000 residential structures.
[2] “Eco-tax – save or pay? Federal Environmental Agency, November 2002.
*from 1 November 2001 for low-sulphur fuels, from 1 January 2003 for sulphur-free fuels (figures rounded off)”
[3] According to Agnolucci, 2009, “all firms in the industrial, agricultural, fishery, and forestry sectors were entitled to an 80% reduction in tax rates provided that their consumption was above a minimum level” of 50,000kWh per energy source with at maximum two energy sources and could apply for a 100% refund of the ETR burden (which was 1.2 times higher than the reduction in statutory pension contributions) on an individual basis.
[4] Speck.
[5] Agnolucci, 2009.
[6] BMU, 2004.
[7] Beuermann, Santarius. 2009.
[8] BMU, 2004.
[9] BUM, 2004.
[10] I bid, all.
[11] Speck, 2008.
[12] I bid.
[13] Speck, 2008.
[14] Speck, 2008.
[15] “Breakthough Deal May Eliminate German Coal Subsidies.” Deutsche Welle. 29 January 2007. http://www.dw-world.de/dw/article/0,,2330393,00.html
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