The Norwegian Green Tax Commission was appointed by the Norwegian Government in late 1994 following an initiative in the Norwegian Parliament. A main point in the mandate of the Green Tax Commission was to investigate how the present tax system could be changed away from taxing labor and towards taxing activities that infer increased use of resources and harmful emissions with a longer term perspective, i.e. into the next century. Such a tax shift should provide a better environment and high employment at the same time. The task of the Green Tax Commission was to assess whether such a Green Tax Reform is feasible under the given Norwegian conditions and whether it could provide the expected goals. The Commission was asked to keep its proposals for tax reform within a revenue neutral framework. Furthermore, Norway's role as a large exporter of energy had to be considered and also the desire of Norwegian authorities to be an international "instigator" regarding both employment and environmental policies. The Commission consisted of representatives from four ministries (Environment, Transport, Energy and Industry and Finance), the academic community from Sweden and Norway, the social partners and industry, the NGOs, and independent representatives. Similar Green Tax Commissions exist in Denmark, Sweden, the Netherlands, and, Belgium. The Scandinavian countries and the Netherlands are the forerunners in greening their tax systems, not only in Europe, but also worldwide. During the last years these countries achieved impressive results in this area.The report of the Norwegian Green Tax Commission was finalized in summer 1996. The English Summary of this report includes the main chapters, containing an assessment of the long term challenges and framework conditions on the international and national level, as well as, a summary of analyses and recommendations. The Commission proposed a large number of changes and increases over a broad range of taxes. A main motive was to transfer well established principles of cost-efficiency into practical policies for a better environment and high employment. Moreover, the members recommended that a number of subsidies with negative incentives on the environment should be abolished or reduced over time. The revenue from green taxes of reduced subsidies ("negative green taxes") should be used to reduce taxation of labor or for other measures that will ease adjustment and structural problems in the labor market. Of course, the ideas and suggestions arose from the Norwegian context, but most of them can be interesting for CEE countries, too.
During its work, the Commission examined thoroughly the following areas:
The members were investigating the international and national environmental and employment challenges and assessed the scope for action Norway has within the international framework when introducing a green tax reform. They included in their considerations the will of Norwegian authorities to carry out a green tax reform as the first country in the world without waiting for the neighboring countries to undertake a similar measure. Topics such as principles of efficient taxation, efficiency gains and losses associated with tax reforms, environmental taxes in relation to other taxes, economic principles related to CO2 taxes, competitiveness and readjustment, revenue potential of taxes in different sectors, environmental consequences of subsidies, environmental effects of the Governments own use of goods and services, industrial subsides, Government expenditures on inland transport and defense expenditures and their effect on the environment are discussed in detail. Furthermore, for each tax so far introduced in Norway and some new eco-taxes proposed by the Commission, the scope of increasing tax rates and the consequences of such a measure on the environment and the revenue potential was examined (CO2 tax, SO2 tax/tradable SO2 emission quotas, taxes on waste, taxes in the transport sector, taxes on substances hazardous to health and the environment, tax on nature, tax on emission permits, taxation of leisure boats, environmentally differentiated taxes on ships and shipping).
Parallel to the examination of a green tax reform from an environmental point of view, the Commission focused the work also on policies for high employment. They looked at the effects of lowering employers social security contributions and measures directed at weak groups in the labor market. The Commission let also carry out several model simulations for different CO2 tax scenarios, its effects on individual economic sectors, and model simulations of an extension of the consumption tax on electricity on manufacturing industry. Based on all this work, the Commission made proposals and recommendations for the short and long term and identified issues requiring further consideration and investigation.
One interesting finding of the Commission was, that a "double dividend" (measures that create positive effects for the environment and employment at the same time) is not necessary for carrying out a large number of measures such as better pricing of environmental services, tax shifts, reduction of subsidies harmful to the environment, etc. Even measures that benefit the environment without hurting total employment or measures that strengthen overall employment and improve the functioning of the economy without affecting the environment negatively generate improvement of the tax system. These improvements alone are sufficient, according to the Commission, to justify the effort and costs caused by changing the current taxation system. Also from this point of view investigating the feasibility of a green tax reform in CEE and NIS countries can be very interesting.
Policies for a Better Environment and High Employment, An English Summary of the Norwegian Green Tax Commission, Oslo, Norway 1996, 183 p. free of charge. The text is fully available on the internet: http://odin.dep.no/fin/publ/policy or can be ordered from Mr. Thorvald Moe of the Norwegian Ministry of Finance: Tel. +47- 22-244112, Fax: +47-22-249512, E-mail: thorvald.moe@fin.dep.telemax.no