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Environmental taxes: current
priorities in
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Still at an early stage
Since independence in 1990, FYR Macedonia has implemented a number of reforms to restructure its economy and social system, with the stated objective of creating a market economy in the country. In this process, environmental protection has been taken into account from the start, with a number of references included in the Constitution of the Republic of Macedonia. Chapters 55 and 56 of the Constitution mention that the freedom of the market may be limited by law, in particular to preserve and promote the protection of the environment and public health. In addition, a National Action Plan for Protection of the Environment (NEAP) has been prepared and adopted by the Council of FYR Macedonia. It was considered as a first step in the long-term objective of the country to become a member of the European Community. It was followed by the establishment of the Law for
Protection and Promotion of the Environment and the Nature, in December
1996. These recent developments in environmental protection show that
environmental policy is taken seriously but is still in its early stage in
FYR Macedonia. As a result, there are few environmental economic instruments
in the country today, the most significant one being the
Environmental Fund, created in 1998. Fund for Protection and Promotion of the Environment and Nature In the beginning of 1998, the Fund for Protection and Promotion of the Environment and Nature was created with the basic aim to mobilise financial resources in order to invest them in projects related to protection and promotion of the environment and nature. This is a significant step in the creation of financial economic instruments. This Fund was part of the Ministry of the Environment (MoE) until the year 2000, when a new Law on the Organisation and Work of the State Administration transformed the Fund into an independent body. At the same time, the MoE was transformed into the Ministry of Environment and Spatial Planning. As a result of this recent significant change, the Fund now has to be reorganized under a new board of directors and a new investment policy needs to be developed. Today, a law is under way to establish the rules and
functioning of the newly independent Fund. New sources of the fund might be
created in this way. For example, taxes on the various oil derivatives and
on tobacco products have been proposed. More generally, the law would
introduce the polluters pay principle, which would enable future developments
in environmental fiscal instruments. A few existing fiscal instruments There are still few fiscal instruments in FYR Macedonia. Today, the only such funding for the Environmental Fund is a tax paid by the owners of motor vehicles and boats when they register. The tax amounts to 4 percent of the vehicle's basic insurance, and only 2 percent for those vehicles which have catalytic converters in place. In the water and waste areas, it appears too early to mention proper economic instruments. The Water Law was only approved in 1998 and the equivalent in the waste area in 1998 and 1999. Today, consumers pay low prices for water and domestic waste services. Of greater interest is the Customs Law, which establishes that items produced outside FYR Macedonia that are intended to protect the environment are not subject to customs clearance. FYR Macedonia appears to be at an early stage in the creation and implementation of proper environmental economic instruments. However, the official documents defining the country's environmental policy and the newly independent Environmental Fund seem to be significant steps towards the development of such instruments. |
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