The financial crisis and fiscal consolidation in green budgets

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This project adds insight into the potential contribution to fiscal consolidation from environmental tax and subsidy reforms, i.e. strengthening public budgets while at the same time improving economic efficiency and the environment. The report contributes with own calculations for potential revenues from environmental taxes and discusses the financial crisis and environmental tax policy responses in Iceland, Estonia and Ireland as case studies. The analysis has been carried out during the period July 2012 – December 2012 by Vista Analysis AS, Norway, Reykjavik University, Iceland and PRAXIS Center for Policy Studies, Estonia. The project was commissioned by the Nordic Council of Ministers.




The Estonian economy has gone through rapid changes in the last decade. During 2000–07 the Estonian GDP growth was in average about 8% annually. The living standard increased considerably – the GDP per capita compared to EU 27 member states increased from 45% in year 2000 to 68% in 2007 (Eurostat, 2012). During this period the inflation was considerably low, unemployment decreased, wages increased, consumer confidence improved, especially when Estonia became the member of the European Union in 2004.


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