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The Use of Economic Instruments in Nordic Environmental Policy 2006–2009

image of The Use of Economic Instruments in Nordic Environmental Policy 2006–2009

The Nordic Council of Ministers publishes regular overview reports on the use of economic instruments in Nordic environmental policy. In this report, Part I presents an overview of the use of economic instruments with the main focus on changes during the years 2006 - 2009. Part II gives a brief overview of mixes of policy instruments (also other than economic instruments) and presents two case studies. There are generally few changes in the use of economic instruments since 2006, except for the introduction of the emissions trading system, EU ETS, and changes in vehicle registration tax systems to become more based on specific fuel use or CO2 emissions. In general, the tax systems could be made more effective and efficient by treating different sectors and fuels more equally.

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Denmark

For almost a decade the Danish politics have been characterised by the tax freeze introduced by the government in November 2001. The tax freeze is based on the following principles (Danish Ministry of Taxation 2002): no tax may be raised; if the tax is based on a percentage the percentage rate may not be raised; if the tax is based on a fixed amount of Danish kroner per unit, the amount of Danish kroner may not be raised; if there is a compelling necessity to introduce or increase a tax the yields may be used in full to reduce other taxes. It should be noted that especially in the area of environment and environmental levies the principles above open up to the possibility of deviating from the tax freeze. However, potential increased tax revenue must be used to lower other taxes (The Tax Commission's proposal, p. 31).

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