GREEN taxes work, say the Swedes. One of the world鈥檚 largest exercises in
using taxes to protect the environment has dramatically reduced acid rain,
switched power stations over to burning coppiced wood rather than fossil fuels
and cleaned up diesel emissions.
Sweden鈥檚 Environmental Protection Agency has released a detailed evaluation
of the country鈥檚 environmental taxes, which were phased in from 1984 onwards.
鈥淭here has been a lot of theoretical work on green taxes in many countries,鈥�
says Olas Jonsson of SEPA鈥檚 environmental economics unit. 鈥淏ut we have the best
case studies of how they can work in practice.鈥�
鈥淚 hope our experience will encourage the European Union to use taxes and
charges as environmental policy instruments,鈥� says Rolf Annerberg, the agency鈥檚
director-general. 鈥淭axes work better than environmental regulations,鈥� he
claims.
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Sweden鈥檚 taxes on sulphur dioxide emissions resulted in a 30 per cent
reduction in acid rain between 1989 and 1995.
The taxes have encouraged power generation companies to invest in
desulphurisation equipment and buy fuel oil that contains less sulphur.
Environmental taxes in Sweden account for only 6 per cent of the country鈥檚
total tax revenue. David Pearce of University College London, who was formerly a
British government adviser on environmental economics, argues that the taxes
have been successful because they have not simply been used to swell government
coffers. 鈥淭he Swedes have been careful to recycle the revenues from these taxes
directly back into subsidies for green investments,鈥� he says. For example, the
sulphur tax revenues help to pay for desulphurisation equipment. 鈥淚 think we
could learn a lot from what Sweden has achieved,鈥� says Pearce.
Other Swedish green taxes cover nitrogen fertilisers, pesticides, the
scrapping of cars, water pollution and gravel extraction. The tax on fertilisers
has led to an estimated 10 per cent reduction in use.