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The financial crisis and fiscal consolidation in green budgets

image of The financial crisis and fiscal consolidation in green budgets

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.

English

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Preface

The financial crisis has developed into a debt and budget crisis, particularly acute in several European countries. From the environmental side it has long been emphasized that while policy in the first phase required and led to stimulation measures, fiscal consolidation efforts in this phase should focus on increased tax revenue through new and increased environmental taxes and charges, and on expenditure cuts achieved by reducing environmentally harmful subsidies. There is considerable international attention to the potential and the need for reducing environmentally harmful subsidies, particularly related to consumption and production of fossil fuels.

English

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