Commissioned by MIRA, HIVA and the University College Ghent investigated the ‘greening’ of the tax system in Flanders. From the results it appears that there are clear signs of a ‘greening’ of the Flemish tax system between 1991 and 2004. This trend is not continued between 2004 and 2010.

The new research report analyses, on the basis of a combination of indicators, how the taxes on activities that are harmful to the environment have changed in the last 20 years in Flanders. 

• The income indicators indicate how much income the government has collected from environment-related taxes.
• The tariff indicators evaluate the changes in the rates of environment-related taxes.
• The implicit tax rate on energy expresses the income from energy taxes with respect to the final energy consumption. It is therefore a sort of rate indicator that only shows an increase when a ‘greening’ of the tax system takes place.

Analysis based on three complementary indicators

Since 2004 the income from environment-related taxes has been continually dropping and in 2009, in absolute figures, it once again reached the level of 1996. The relative importance of this tax income is also decreasing. Energy taxes represent the largest share (60 %) of the total income from environment-related taxes, followed by transport taxes (31 %), the federal environment tax (5 %) and the Flemish environment taxes (4 %).

The changes in the tax rates on activities that are harmful to the environment are not as clear. The rates on energy, waste and waste water have been increasing in recent years. The rates on transport and federal taxes are actually decreasing. The tax on activities that are harmful to the environment has therefore, in global terms, remained stable since 2004.

The implicit tax rate on energy has been decreasing slightly since 2004 and is clearly lower than in the neighbouring countries and the rest of the EU.

Tax reform in Flanders and a few European countries

The report also analyses to what extent Flanders and a few other European countries have incorporated the principles of a ‘green tax reform’ in their tax system. Between 1995 and 2008 the environment taxes in Flanders decrease more than the taxes on labour. In the same period, Denmark, Sweden, the Netherlands and Germany do record a ‘greening’ of the tax system. The environmental taxes in these countries increase more (or decrease less) than the taxes on labour.

Flanders and Belgium have, in comparison with other European countries, low environment-related taxes and high labour taxes. ▪

• Read the English summary of the report ‘Indicators for the greening of the tax system in Flanders’.
• MIRA contact person: Nathalie Dewolf (n.dewolf@vmm.be)