Tax recycling pays

Last Updated: Saturday 04 July 2015

LEVYING taxes for the protection of environment has done wonders for Sweden. Green taxes have led to a sharp decline in acid rain, encouraged power stations to burn less fossil fuels and cut diesel emissions. These results have been highlighted in a detailed evaluation of the country's environmental taxes, which were introduced from 1984 onwards. The study was recently released by Sweden's Environmental Protection Agency.

The study says that taxes on sulphur dioxide emissions reduced acid rain between 1989 and 1995 by up to 30 per cent. The taxes prompted power generation companies to invest in desulphuriation equipment and buy fuel oil that contains less sulphur. According to David Pearce, an environmental economist, the success of the Swedish tax experiment Les in the recycling of green taxes. The revenues from the taxes were not simply used to fin government coffers but were recycled directly back into subsidies for green investments. For instance, the sulphur tax revenues help to pay for desulphurisation equipment. "I think we could learn a lot from what Sweden has achieved," says Pearce.

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