Environmental economic instruments, 2013

The statistics on environmental economic instruments give an overview of taxes introduced to correct for negative effects in the environment caused by human activities, in other words making environmental damage more expensive.

Large increase in environmental taxes since 1995

Since 1995, the government’s income from environmental taxes has nearly doubled. This is due to an increase in the number of environmental taxes, an increase in the use of the products levied with a tax and changes in excise rates – both price increases and the use of economic instruments. In 2013, the environmental taxes share of total taxes was 3.5 per cent, while in 1995 it was 5.6 per cent.

Taxes on greenhouse gas emissions and the use-dependent car taxes dominate, i.e. mainly the use of fossil energy products. Since 1995, these taxes have made up over 90 per cent of the total environmental taxes. Expenses on the use-dependent car taxes and taxes on greenhouse gas emissions have also had the largest increase since 1995. This is due to the increased use of products levied with these taxes and higher excise rates.

Of the NOK 32.8 billion that was paid in environmental taxes in 2013, 42 per cent and 52 per cent were from taxes on greenhouse gas emissions and emission permits and road use taxes respectively.

Who pays environmental taxes?

The expenses to environmental taxes are allocated relatively evenly between the industries and the households in the economy, but there is a clear difference between the types of environmental tax that are paid. The households’ expenses to environmental taxes are dominated by the use-dependent car taxes, while the industries’ expenses to environmental taxes are dominated by both the use-dependent car taxes and taxes on greenhouse gas emissions.

The development since 2008 shows that the households have had a smooth development, while the industries have paid a decreasing share of the environmental taxes. Within the industries, there are large variations between which industries are subject to an environmental tax and which are exempt.

Strong increase in taxes on greenhouse gas emissions

Taxes on greenhouse gas emissions and emission permits have had a solid increase since 1995. The introduction of the CO₂ tax in 1999 and the introduction of the CO₂ component in the motor vehicle registration tax together with emission permits in 2008 contributed to the strong increases in the period.

It was mainly the households and the oil and gas industry that paid the taxes on greenhouse gas emissions and emission permits in the period 2008-2012, with a total of 65 per cent throughout the period. In 2012, the households paid almost NOK 5 billion, while the oil and gas industry paid over NOK 3 billion. For the households, this was due to taxes on fuel where they are relatively large consumers, while for the oil and gas industry the expenses came from the tax on CO₂ emissions from petroleum extraction and the purchase of emission permits.

Taxes on petrol and diesel follow the consumption

The expenses on road use taxes have had a relatively even development over the last 18 years and have followed the consumption of fuel with the exception of a fall in 1999 and 2001. In 1999, the CO₂ tax was separated out into a separate tax and contributed to a fall in the petrol tax, while the excise duties were reduced for petrol and diesel tax in 2001 compared to all other years where there had been a steady increase.

From 2005 and onwards, tax on petrol and diesel has had the opposite development, whereby the tax income from petrol has fallen and the tax income from diesel has increased. This reflects the transition from use of petrol to diesel.

Households paid over 50 per cent of the road use taxes in the period 2008-2012, while the transport industry paid under 20 per cent. In 2012, this contributed to a payment of almost NOK 15 billion by the households.

Other environmental taxes

Within the remaining environmental taxes there have been large variations since 1995, with introductions of several new taxes and different levels of taxes.

Within taxes on waste, the households paid over 80 per cent in 2012 in contrast to under 40 per cent in 2008. The large decrease in the tax on the final treatment of waste paid by the industries has contributed to this shift in costs to households but households’ reduced costs during the period was also a contributory factory.

In 2007, the tax on NO_x emissions was introduced as an instrument to achieve the goals set in the Gothenburg Protocol. Exemptions are made from the tax when entering into an environmental agreement with the government on the implementation of NO_x-reducing measures, which has contributed to a large decrease in the tax after it was introduced.

Obligatory international reporting from 2013

As from 2013, environmentally related taxes are included in the obligatory reporting to the European statistics agency, Eurostat. The definition of environmentally related taxes applied in the international reporting differs from that used for environmental taxes.

For 2012, a total of nearly NOK 70 billion in environmentally related taxes was reported for Norway to Eurostat. The difference of NOK 40 billion from total environmental taxes is mainly due to the electricity tax, the annual tax on motor vehicles, the re-registration tax and the registration tax, with the exception of the CO₂ and NO_x component.