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Hungary: The Current Political Debate on
the Introduction of Emission Charges |
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Hungary began the EU approximation process back in 1991 and
officially requested membership in April 1994. The National Programme for
Adoption of the Acquis Communautaire (ANP) established a legislative
harmonisation programme to be achieved by the end of 2001.
The first phase of transposition, the screening of legislation, was completed in June 1999. It pointed out the large gaps in such fields as water, air quality and waste management. Although limited progress was made in 1999 and 2000, the EU recently agreed to temporarily close the environmental chapter of Hungary's harmonisation programme. Transition periods have been accepted in four areas: the re-use of packaging material, municipal sewage-water treatment, hazardous waste incineration and air pollution by large power plants. The latest estimated costs to complete approximation range from EUR 10 to 15 billion. In this context, environmental economic instruments could play a major role in providing money for environmental approximation. Resistance and major obstacles, however, have surfaced in the past few years. In particular, the high Hungarian labour tax does not leave much room for additional financial burdens on tax payers. As a result, Hungary does not have many environmental economic instruments in place today, though there has been recent discussions on the possible introduction of new emission charges. The 1995 Environmental Protection Framework Act provides Hungary's legal and institutional framework for environmental policy. It introduces possible regulatory tools for environmental protection, including economic instruments such as emission charges, product charges, user charges and a deposit-refund system. In addition, the first National Environmental Protection Programme (NEPP) was adopted by the Hungarian Parliament in 1997 for a period of six years (1997-2002). It states that national environmental protection objectives must be supported by a change in the existing system of taxes and duties. As a result, some basic environmental charges have been established or improved in the past few years. There are charges for use and abstraction of water (first implemented in 1992, and then increased in 1999), waste collection and disposal, the mining and changes in use of agricultural land, and product charges. The latter have been extended in 1998 with a new charge on lubricating oils and increased in both 1998 and 1999. They now cover packaging material, car tyres, refrigerators, refrigerants, car batteries, gasoline, lubricanting and used oil, with some positive waste management results. In general, existing environmental charges are still quite low, the system of fines is not dissuasive, and the whole system lacks efficient enforcement by environmental inspectorates. In view of the necessary EU approximation process and the national objectives of NEPP, for the past few years the Ministry of Environment has been developing a system of emission charges . The proposal targets emissions to air, water and land. It includes specific mechanisms to provide industrial plants with some flexibility regarding pollution reduction methods and timeframes. Air emission charges would be imposed on SO2, CO, NOx, solid particulars and some hazardous substances. In the case of water, the proposal is to calculate emission charges on the basis of several elements: chemical oxygen demand, organic solvents, phosphor, nitrogen, heavy metals, salt, toxicity and heat. The stated objective is to decrease the quantity of pollutants in surface waters and to improve the sewage water treatment system in the industrial and agricultural sectors. As far as land charges are concerned, the objective is to motivate households to connect to existing drain pipe systems in order to reduce environmental pollution from uncontrolled sewage disposal. So far, land pollution remains free of charge in Hungary. Today, the main obstacle to the introduction of such emission charges is a disagreement between the Ministry of Environment and the Ministry of Finance over allocation of the money raised. The Ministry of Environment proposes to use the money for environmental purposes, whereas the Ministry of Finance would favour a transfer to the central budget and a parallel reduction of other taxes, particularly labour tax. Article based on report written by Judit Zalatnay, Hungary. |
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