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This release contains an analysis of environment taxes by category of tax and economic sector of the payee.
The starting point to produce Environment taxes is the National Tax List prepared by the CSO for the National Accounts and submitted to Eurostat under the European System of Accounts transmission programme. A number of different data sources are used to allocate revenues to payee sectors. These include the Supply-Use tables and Personal Consumption Expenditure data from the National Accounts, Business Energy Use survey estimates along with specific information about individual taxes.
Environment taxes 2022 show revisions when compared with corresponding figures in the 2021 Environment taxes release. These revisions arise due to the incorporation of the 2019 Supply and Use Table, annual revisions to taxes in our National Accounts and significant methodological changes to the Business Energy Use survey. For 2022, changes to the Business Energy Use survey estimates in 2019 have resulted in substantial revisions to the Environment taxes for the years 2013 to 2022, and mainly effect the transport and distribution sectors of the Environment taxes.
An environment tax is defined by Regulation (EU) 691/2011 as:
“A tax whose tax base is a physical unit (or a proxy of a physical unit) of something that has a proven, specific negative impact on the environment, and which is identified in ESA as a tax.”
Once a tax base has been included in the list of environment tax bases, any tax levied on that base is considered an environment tax, irrespective of the motivation behind it. A list of Environment tax bases was agreed by Eurostat, the EU Commission, the OECD and the IEA and has been periodically revised. Table 1 contains national level data for each tax.
Environment taxes reported in this release do not have a VAT component as VAT is recorded separately in the National Tax List. The key reason VAT is excluded is because VAT is mainly levied on households but is deductible for business. Accordingly, its inclusion would distort the overall proportion of environment tax paid by households relative to other sectors of the economy, while not influencing relative prices of environmentally harmful activities in the same way that other economy wide taxes on environmental tax bases do.
Plastic packaging is now subject to a new charge called the Plastic Own Resource (POR) levy. In 2022 this amounted to €196.7 million. As this charge is levied directly on the Irish Government by the EU it is deemed a current transfer within the national accounts. Accordingly, it is not a tax and therefore not included as an environment tax in this release.
This category includes taxes on energy production and energy products, including taxes on fuels for transport and stationary purposes. By definition Carbon taxes are included as an Energy tax rather than a Pollution tax, largely to aid international comparability. In Ireland’s case, taxes on transport fuels make up the bulk of energy taxes.
This category includes taxes related to the ownership and use of motor vehicles. In Ireland this mainly relates to Vehicle Registration Tax (VRT) and Motor tax.
This category includes taxes levied on emissions to air and water, management of solid waste and noise. Carbon taxes are not included in this category.
Included are taxes linked to the extraction or use of natural resources. Taxes on land are generally not included, nor are taxes designed to capture the resource rent from the extraction of natural resources.
Payees are classified by household and industry according to NACE Revision (Rev.) 2 classification - the European Union’s Statistical Classification of Economic Activity in the European Communities. The taxpayer is considered to be the unit using the tax base (e.g. user of electricity or transport fuel) or undertaking the activity being taxed (e.g. disposing of waste). This principle (often called the "polluter pays principle") holds regardless of where the tax is collected. Taxes on transport fuels are, for efficiency reasons, collected from mineral oil tax warehouses. The tax has been allocated to the unit purchasing the fuel for final use.
For further information on the NACE Rev. 2 classification of industrial activity, visit the CSO website:
All NACE Rev.2 sectors are covered in Tables 2 to 5 using abbreviated titles as follows:
| Abbreviated Titles | Full Titles |
|---|---|
| Agriculture, forestry and fishing (01-03) | Agriculture, forestry and fishing (01-03) |
| Industry (05-43) | Industry (05-43) |
| Mining and quarrying (05-09) | Mining and quarrying (05-09) |
| Food, beverages and tobacco (10-12) | Food, beverages and tobacco products (10-12) |
| Textiles and pharmaceuticals (13-21) | Textiles, wood, leather, petroleum, chemical and pharmaceutical products (13-21) |
| Plastic and non-metallic minerals (22-23) | Rubber, plastic and non-metallic mineral products (22-23) |
| Metals, machinery and equipment (24-33) | Metals, computers, electronic, electrical, machinery and equipment, transport and other manufacturing, repair and installation (24-33) |
| Electricity and gas (35) | Electricity, gas, steam and air conditioning supply (35) |
| Water and Waste (36-39) | Water collection/treatment/supply, sewerage, waste collection, treatment, disposal, materials recovery, remediation and other waste management (36-39) |
| Construction (41-43) | Construction (41-43) |
| Services (45-96) | Services (45-96) |
| Wholesale and retail trade (45-47) | Wholesale and retail trade including motor vehicles and their repair (45-47) |
| Transport, postal and warehousing (49-53) | Transport, postal, courier activities including warehousing and support (49-53) |
| Accommodation and food (55-56) | Accommodation; food and beverage service activities (55-56) |
| Information and computing (62-63) | Computer programming, consultancy, information services activities (62-63) |
| Rental and leasing (77) | Rental and leasing (77) |
| Public administration (84) | Public administration and defence; compulsory social security (84) |
| Other Services (58-61, 64-66, 68-75, 78-82, 85-88, 90-96) | Other Services (58-61, 64-66, 68-75, 78-82, 85-88, 90-96) |
The method used to allocate environment taxes to taxpayers varies depending on the tax in question, using Supply-Use tables in some instances and more detailed sources (e.g. the Business Energy Use survey) where such are available.
The largest component of energy taxes relates to taxes levied on fuel purchases. The overall environment taxes reported in the National Tax List is split according to fuel type excise data available from the Revenue Commissioners. Separately, Personal Consumption Expenditure is also available for each fuel type within the National Accounts. The household component of tax revenue associated with each fuel type is estimated by combining these two sources. The residual (i.e. non-household) component of tax revenue is then allocated across all NACE Rev. 2 sectors. Transport fuels are allocated according to NACE sector analysis of Business Energy Use survey. For non-transport fuels and other non-fuel Energy taxes including the Carbon tax, Electricity tax and the National Oil Reserves Agency Levy, allocation of the respective tax to payee NACE Rev. 2 sector is accomplished using Supply-Use tables.
Revenues from transport taxes are predominantly derived from two sources, Motor tax and Vehicle Registration Tax (VRT). The National Tax List splits motor tax into household and business components with the business portion further allocated to payee NACE Rev. 2 sector using Supply-Use. VRT is payable by consumers on purchase or private import of a motor vehicle. The rate of tax varies by type of vehicle and CO2 emissions rating. The Supply-Use tables are used to allocate the tax revenues to taxpayers with non-applicable sectors (e.g. the motor trade itself) excluded.
Transport taxes also include an “Air travel tax” which was payable by all passengers travelling by air during the period 2009 to 2014. This revenue is allocated to business and private travel using data from the CSO’s Household Travel Survey. The remaining business travel portion is then allocated using the Supply-Use tables.
There are four taxes classified as Pollution or Resource taxes, namely a Landfill levy, a Plastic bag levy, a Fisheries levy and a Petroleum Act levy. Revenue raised from the landfill levy (a “per tonne” levy on waste disposed of via landfill) is allocated using the Supply-Use tables excluding not-applicable industries (e.g. intermediaries). The Plastic bag levy is levied on shoppers; accordingly, it is allocated entirely to households.
The Fisheries levy is a very small resource tax levied on fishing. The bulk of this tax is allocated to households (arising from rod-licences) with the residual allocated to NACE 03 (fishing sector).
The National Tax List excludes the Petroleum Act levy as a “resource rent”.
The manual, "Environment taxes - a statistical guide", published by Eurostat is the relevant source for defining what tax bases are to be considered within the remit of environment taxes. All taxes levied on these bases are thereafter considered to be environment type taxes regardless of the reason why the tax was originally introduced. The 2013 update of the manual lists the following environment tax bases:
Table 1 presents the total environment taxes from 2013 broken down by category of environment tax and individual tax type. Tables 2 to 5 present the environment tax categories broken down by economic activity of the payee.
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