Shift taxes from labour to environment, EEA tells ministers

A coal plant in Datteln, Germany. [Arnold Paul/Commons].

A coal plant in Datteln, Germany. [Arnold Paul/Commons].

Hans Bruyninckx, the director of the European Environment Agency, has urged ministers to carry out fiscal reforms, such as moving tax from labour to activities that damage the environment.

The EEA issued environment and employment ministers this week with a report arguing that “greener” fiscal reforms can boost employment, while protecting the environment.

Shifting tax away from labour, for example, makes it more attractive for employers to hire new people, boosting economic growth, the EU body says.

The ministers met in Milan, under the EU’s Italian presidency, to discuss climate change and green growth.

“Well-designed environmental taxes can reduce pollution and increase resource efficiency in a very cost-effective way, and at the same time promote employment, economic growth and social fairness,” Bruyninckx said in an email, adding that environmental taxes were “still an under-used tool”.

Environmental taxes currently account for 2.4% of EU GDP.

The report also contains other recommendations for boosting the economy through greening, such as facilitating the development of more environmentally-friendly products and services, so-called ‘eco-innovation’. The report says that there is a correlation between the adoption of eco-innovation amongst firms and the resource efficiency of the countries in which they operate.

Employment strategies that protect the environment

The EEA says that the economic crisis stalled progress on protecting the environment, despite attempts to integrate environmental objectives into fiscal recovery strategies.

Ministers have been wary of imposing too much “green tape” on companies, fearful that it could slow the economic recovery.

However, many Europeans continue to find themselves unemployed, particularly the young. Youth unemployment is estimated at between 20 and 30% across the European Union.

Guy Ryder, the director-general of the International Labour Organization, also addressed EU ministers in Milan, making the case for employment strategies that protect the environment, such as greener investment. “The world does not have to choose between job creation and preserving the environment,” he said in a statement.

The informal ministerial comes after the European Commission published proposals earlier this month aimed at pushing the EU towards a ‘circular economy’, with higher recycling targets and a phase-out of landfill.

The Commission released a series of measures aimed at boosting more environmentally friendly employment, such as in water, waste and renewable energy.

The EU and international organisations, such as the UN, have sought ways to combine job creation, as nearly 10 million jobs were lost in the economic crisis, which began in 2008, and left many young people out of work.

The EU also faces an ecological crisis, with per capita emissions currently at three times the admissible level, if the world is to stay below its target of not exceeding 2°C warming by the end of the century compared to pre-industrial levels, according to the UN. The EU is also depleting resources at a faster rate than the environment's capacity to regenerate.

Officials have therefore sought to combine solutions to the economic and ecological crisis.

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