, where 
In addition to these non-compliance fines, there are user charges in place with respect to water management (user charges on water abstraction and on the use of water from water pipes or sewage systems). In 1992, a product charge on all types of fuel was introduced. For glass bottles, a deposit refund mechanism is in force. In Hungary only in some municipalities municipal waste user charges are in force.
Most of the economic instruments in force today, were introduced under the past government system with a planned economy and state-owned enterprises. Since 1990, amendments to the regulations on all types of environmental protection fines have been adopted with the aim to adjust to the different contemporary economic circumstances. Even with the modified mechanisms, however, the fine system is inefficient and fails to provide incentives to change polluting behavior. The fine system is the main environmental enforcement tool in Hungary.
The levels of the fines are far too low to give an incentive to change polluting behavior and to prevent future pollution (i.e. to internalise environmental costs). There have been no attempts so far to adjust the fine levels according to inflation. The fine levels are still the same as at the time when the charges were introduced in the 70s and 80s (except for the waste water and sewerage fine, where the levels were doubled in 1993, but which are still far from compensating for the inflation over that period). Even at the time of their introduction, the fines did not provide real economic incentives to change polluting behavior, given the fact that it was the State that was both imposer of the fines and the subject being charged, and also that the possibilities for implementing environmental protection measures were rather limited due to the political and economic circumstances.
There are major problems related to the adequate monitoring of pollution. The Hungarian monitoring system was originally designed to monitor ambient circumstances from a scientific viewpoint. This monitoring system is in place and functions adequately. Changing environmental circumstances, economic restructuring, privatization, and the expressed expectations of external donors may reasonably require different approaches. However, until there is a substantial shift in the assumption underlying the central government's view of environmental activities ("environment costs money"), there will be no substantive improvement in the monitoring systems. Some fines are based on self-reporting of a long list of pollutants. The collection and the enforcement of the fines are in most cases designed with the assumption that there are a few large polluters. With the increasing number of small and medium-sized enterprises, it is difficult to verify these self-reports.
The calculation mechanisms for the fines reflect the wish to include all possible variations of non-compliance into one formula. Therefore, they are rather complicated, allowing various specifications and exceptions for every possible case. This results in low calculability for the companies, high administrative costs incurred by the enforcement institutions, and the results of the implementation are hardly comparable and transparent. In some cases, the calculation mechanisms also leave room for 'hiding' pollution with simple tricks. In the case of the waste water fines, for instance, the waste water can be diluted with clean water when authorities take samples, which results in lower concentrations of the pollutant and thus lower fines.
The internal ministerial mechanisms for administering the fine system are inefficient, and only about 50 percent of fines levied are actually collected. The Inspectorates levy the fine, but do not carry out the actual collection responsibility; this is actually handled inside the Ministry of Environment in the Economic Department. It is questionable whether the institutional framework for determining, imposing and collecting the fines is the most efficient one.
The redistribution of the income is mainly done through the Central Environmental Protection Fund, CEPF (in the case of most fines, 70% of the collected revenue is channelled into the CEPF). The majority of the CEPF's expenditures are for financing public environmental investments and facilities. There is no regulation requiring that some portion of the revenue generated by the fines be redistributed back to the entities which originally paid the fines. This issue could become more important if substantively higher fine levels would be introduced.
In some cases, fined companies are not able to pay due to their financial situation while some are simply unwilling to pay. This results in non-payment, exceptions, or payment delays. The weaknesses in the Inspectorate authority, in the legal system, and in administrative procedures of the Ministry of Environment do not create favorable conditions for effective enforcement.
Since 1991, sanctioned fines can be contested before court. The charge for such an administrative procedure is low (HUF 6,000). The procedures are not fully developed yet and have a postponing effect on paying the fine (in the case of unresolvable payment issues, legal procedures can take as long as five years while the issue is considered at the National Environmental Authority and courts - in the meantime, companies are not required to deposit any moneys and pay no penalties or fees on top of the fines during that period, and in many cases do not pay subsequent fines for more or other infringements). According to a report of the National Authority for the Environment, through 1993, 86 decisions of the Supervisory Board (Inspectorate) were sued in court, from which 42 cases were won, 40 are pending and 4 were lost by the Inspectorate. The sum of imposed fines in the contested decisions was close to 425 mln HUF (from which 332 mln HUF was charged for hazardous waste).
There is low public awareness of and support for such solutions. In addition, a generally rather low respect for the principle of the rule of law has negative effects on compliance with regulations.
At present, the political interest for environmental policy is low. The slow (in comparison to other CEE countries) and difficult process of establishing a new and up-to-date system of environmental law is only one example.
The government, most politicians and economists argue that new or higher charges and taxes for environmental purposes are an unbearable burden for the economy at this point. Awareness is lacking on a very broad level that economic instruments do not necessarily mean an economic burden. Non-environmental taxes and charges are given higher priority and are introduced more easily.
There is only a small number of qualified environmental economists and technical experts. The cooperation on both levels, between the respective Ministries and within the MoE, is sometimes hindering efficient work.
In the process of establishing new environmental legislation and also following the need to create new sources for revenue for environmental protection, several new economic instruments are in the planning phase at present.
In the actual draft for the framework environment protection law, the concept of "environment load charges" is proposed. Along with that, the MoE is elaborating a proposal for a waste water effluent charge, that would be based on one specific, complex water quality criterion (BOD or COD). In addition, emission charges on 2-3 air pollutants are under preparation.
Also, a product charge on vehicle tires is being prepared by the MoE together with the Ministry of Industry and Trade. According to the proposal of the MoE, importers of tires and domestic producers of tires must pay HUF 250 for one "average car tire" (the MoIT proposes HUF 125 per tire). The main intention of this charge is revenue raising. The revenue is proposed to go to the CEPF, earmarked to subsidize investments and operation costs of the rubber-recycling or similar industry. The expected revenue per year is 0.5 - 1 mln HUF. According to a feasibility study done on the proposal, the impact of this charge on the environment is rather unclear.
Furthermore, proposals for product charges on freezers (CFC content), batteries and lubricant oil are being elaborated by the MoE.
Possibilities for emission trading in the field of air pollution is under discussion in mainly academic circles. Draft new air legislation includes provisions for the possible introduction of such a system.
In the Corporate Income Tax system, there are some incentive measures, basically tax exemptions, supporting environmental protection.
The tax base can be reduced similarly to the income tax base reduction with the contribution to environmental foundations. Furthermore, from 1994 the tax base for companies not earning a profit is 2% of their total revenues from which revenues of publicly provided treatment activities, such as waste water treatment, can be deducted. Deductions from the calculated tax are possible for foreign ventures if their activities cover, among others, environmentally benign activities. However, after 1994 eligibility cannot be obtained for this exemption.
In 1992, the possibility to claim tax reduction after environmental protection investments up to 20% of the investment cost paid in a given year was introduced. This exemption has, however, been terminated in 1993.
From 1994 on, partly replacing the above two exemptions, a new tax exemption measure has been introduced to encourage investment. As part of this package, tax exemption can be claimed by corporations whose capital is larger than 500 million HUF and they start investment projects above 200 million HUF that results in producing environmentally friendly product.
Finally, if environmental services such as solid waste management and municipal waste water treatment are provided by "companies serving public interests", it is all together exempt from Corporate Income Tax.
In the Consumption Tax, there are two types of products where tax differentiation is environmentally motivated. One is the group of cars with catalytic converters which is exempt from Consumption Tax as opposed to other cars, which presently pay 12% of the cars price. The other is the lower Consumption Tax on unleaded gasoline. The difference has been increasing and it is about 8 HUF/l at present.
In the Price Support system, the biggest environmental impact is likely the elimination of price tax subsidies on energy and water consumption, while maintaining some subsidies on public transport.
The Vehicle Tax also has an environmental element which is the reduction for vehicles with catalytic converters. This yearly tax is based on the weight of the vehicle, generally 200 HUF/ 100 kg. The tax is only half of the calculated amount for vehicles with catalyzers.
In the Land Tax system, the calculated Land Tax should be cut by half if the land is cultivated in an environmentally friendly way. However, this tax exemption has little incentive effect because Land Taxes are generally waived at the moment.
However, Hungary's so called "short and medium term environmental policy" was adopted in 1991. This strategy defined general objectives rather than set clear priorities. Very little was said about the economic background, which is partly a reflection of the fact that there is no long-term economic strategy. The issue of economic instruments is addressed generally too: 'It is necessary to change the present fining system that requires the development of a charge system concerning the use and load of the environment'. There are plans to rewrite the short and medium term environmental policy.
A long term environmental policy is in the concept phase at present. The concept was approved by the Government in March 1994. It stresses the User Pays Principle as well as the Polluter Pays Principle. It is recommended in that draft that in conjunction with the strengthening market, economic instruments should gradually be introduced. Here, the strategy envisions product charges for the short term, while for the longer term the introduction of 'eco-taxes' is proposed.
The system of environmental law established under the past political system is still in force in Hungary. A new environmental protection framework law, which would also establish the legal basis for sectoral laws (air, water, waste, etc.) has not been adopted yet. However, since 1990 several draft proposals have been prepared.
In the most recent draft for the framework environmental law, prepared by the Ministry of Environment and Regional Policy, the modification of some of the existing instruments (fines), and the introduction of new instruments, is outlined (especially so called 'environmental load charges' in the field of air and water pollution). The drafting of special acts for clean air, water protection and noise protection is ongoing.
| Direct support from the State Budget | 11,300 mln HUF | (105 mln ECU) | 49 % |
| Municipal and environmental related funds | 6,900 mln HUF | (64 mln ECU) | 30 % |
| Central Environmental Protection Fund | 2,550 mln HUF | (24 mln ECU) | 11 % |
| Water Fund (environment related funds) | 700 mln HUF | (7 mln ECU) | 3 % |
| Enterprises | 1,500 - 2,000 mln HUF | (14 - 19 mln ECU) | 7 % |
| TOTAL | ca. 23,000 mln HUF | (ca. 215 mln ECU) | 100 % |
|---|
The Central Environmental Protection Fund (CEPF) is the most important mechanism for the redistribution and use of revenue from economic instruments. The CEPF, administered by the Ministry of Environment and Regional Policy, is providing financial support and loan guarantees to assist the realization of environmental investments, can cover costs to remediate environmental damage caused by accidents, and contributes to financing other environmental actions serving public interest. Table 1 presents figures on the total domestic revenues to the CEPF in 1992 and 1993, as well as the share of various sources of this revenue. While the total revenue of the CEPF in 1993 amounted to 36.3 mln US$ (including a 7.0 mln contribution from PHARE), the total 1993 expenditures were 27.7 mln US$. The long term spending strategies of the CEPF are at present based on "Conceptual Settings of the Ministry of Environment", while in the short term the Annual Program for Support designates budget allocations to the specific priority fields for the given year.
Table 1. According to data provided by the Ministry of Environment and Regional Planning, the share of revenues from domestic sources of the CEPF for 1992 and 1993 was the following:
| Total revenue of the CEPF (domestic sources) |
Fines (air, hazardous waste, noise, waste water, nature protection) |
Product charge on gasoline | Traffic transit fee | |
| 1992 | 1,636.0 mln HUF | 34 % | 54 % | 12 % |
| 1993 | 2,699.3 mln HUF | 21 % | 54 % | 25 % |
From 1994 on, the traffic transit fee revenue, (as well as any other revenue from budgetary sources) will not go to the CEPF anymore; the traffic transit fee will go into the Road Fund.
STATUS
Introduced in 1973, revised in 1986.
AIM
Assisting the enforcement of emission standards and
revenue raising. Incentive effect: When the regulations valid
at present were introduced in 1987, a certain incentive to change
the environmental behavior was given according to the level of
fines that were politically accepted. At present, there is no
incentive effect anymore as the fines are too low (in part because
of inflation).
SUBJECT
If air pollution emissions are above the respective
standards, fines can be levied on: the operator of stationary
point sources (e.g., industries), building sources (e.g., heating
systems); if the emission source is within 20 meters from
the nearest existing house or institutional building, and; on
diffuse surface sources (e.g., waste dumps and surface mines).
In practice, fines are only levied on stationary point sources.
They are levied based on quarterly self reporting.
OBJECT AND LEVEL
Fines can be levied on emissions exceeding the respective
standards of approximately 200 air pollutants (where the limit
level for 24 hours is decisive). Each pollutant is classified
according to one of 4 classes of danger. There is a different
system of calculation for stationary point sources, building sources,
and surface sources. The formulas for these calculations are complex.
The one for stationary point sources is described below.
The fine is proportional to the environmental damage inflicted according to the degree of exceeding the emission standard. Further, the level of the fine depends on parameters reflecting the regional differentiation in air pollution, an index reflecting the height of emission, and the number of operating hours per quarter of a year. For each pollutant a basic fine is calculated. The sum of these is the total fine to be paid.
By 1987, the existing fine levels tripled; fines became progressive and it was allowed to forgive part of the fine for companies who invested in air pollution control; in case of non-compliance with reporting duties, fines could be raised by 50%.
INCOME
| imposed | collected (income to CEPF; excl. 30% to munic.) |
||
| 1990 | 419.2 mln HUF | = 5.2 mln ECU | |
| 1991 | 851.6 mln HUF* | = 9.2 mln ECU | |
| 1992 | 260.0 mln HUF | = 2.6 mln ECU | |
| 1993 | 349.4 mln HUF | = 3.3 mln ECU | |
| * This amount includes some previously collected fines too, because in 1991 the final steps in the re-organization of the environmental Inspectorates took place. | |||
USE OF INCOME
Since 1991, 30% is non-earmarked revenue to respective
municipal budget. 70% goes to the Central Environmental Protection
Fund (CEPF). It is used for the CEPF programs (not specifically
earmarked for air pollution programs).
IMPLEMENTATION AND EFFECTIVENESS
The fine is designed to deal with large polluting
sources and the administrative costs increase quickly when trying
to address small sources.
LEGAL BACKGROUND
Decree 21/1986 (2.VI.) MT (Council of Ministers):
Protection of Clean Air
Decree 4/1986 (2.VI.) OKTH (National Environmental
Protection and Nature Conservation Agency): Air Pollution Fine
Decree 5/1986 (10.XIII) EüM (Ministry of Health):
Air Quality Standards
EXECUTING AUTHORITIES
Design of the fine: Ministry of Environment.
Revenue collection and enforcement: Regional Environmental
Inspectorates.
Revenue use: Ministry of Environment, Secretariat
of the CEPF.
PERSPECTIVES
New air legislation is in preparation. It will be
submitted after the adoption of the framework law. It includes
proposed changes from territorial regulation to a BAT (best available
technology) approach and also a change from the existing fine
system to a system of emission charges.
INFORMATION SOURCES
Personal enquiry. Respective legislation.
CALCULATION MECHANISM FOR THE AIR POLLUTION FINE
ON STATIONARY POINT SOURCES.
The total fine to be paid for a source is the sum
of the basic fines, calculated separately for each pollutant.
The yearly fine per polluting substance is the sum of the fines
calculated for a quarter of a year.
The basic fines for a particular substance for stationary point sources are calculated according to the formulas:
B = (E - En) x t x b1 and En = Ef x K1 x K2, where: Z = E / En
B is the basic fine for a particular substance per quarter of a year [HUF].
E is the average value of effective emission for a quarter of a year [kg/h].
En is the emission standard determined for the particular emission source [kg/h].
t is the number of operating hours for a quarter of a year [h].
b1 is the fine rate, depending on Z and on the class of danger of the pollutant [HUF/kg].
Ef is an index reflecting the height of the emission source [ kg * m3 * h-1 * g-1].
K1 is the permitted limit level of air quality for 24 hours at the respective regional protection category (ambient standard) [g/m3].
K2 is a loading index determined in connection with the degree of air-pollution in a region. This index may be changed by the Minister of Environment [-].
| Key for b1: | Key for Ef: | |||||||
| Degree of exceeding the limit value of emission (Z) | Key of fine b1 (HUF/kg) class of danger of the polluting material |
Emission height H (m) |
Ef | |||||
|---|---|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | |||||
| 1.00 - | 2.00 | 1.0 | 0.5 | 0.3 | 0.2 | 0 < H < 10 | 0.002 | |
| 2.01 - | 4.00 | 2.0 | 1.0 | 0.6 | 0.4 | 10 < H < 20 | 0.006 | |
| 4.01 - | 8.00 | 4.0 | 2.0 | 1.2 | 0.8 | 20 < H < 35 | 0.09 | |
| 8.01 - | 12.00 | 6.0 | 3.0 | 1.8 | 1.2 | 35 < H < 50 | 0.70 | |
| 12.01 - | 20.00 | 8.0 | 4.0 | 2.4 | 1.6 | 50 < H < 80 | 2.0 | |
| 20.01 - | 50.00 | 10.0 | 5.0 | 3.0 | 2.0 | 80 < H < 100 | 4.0 | |
| 50.01 - | 100.00 | 12.0 | 6.0 | 3.6 | 2.4 | 100 < H < 120 | 6.0 | |
| 100.01 - | 14.0 | 7.0 | 4.2 | 2.8 | 120 < H | 30.0 | ||
K1 for some of the most important pollutants (in g/m3). The protection zone 2 is revised every 5 years
| Class of danger | Specially protected zone | Protection zone 1 | Protection zone 2 (industrial zones) |
|
|---|---|---|---|---|
| SO2 | 3 | 100 | 150 | 500 |
| CO | 2 | 2000 | 5000 | 10,000 |
| NOx | 2 | 70 | 150 | 200 |
| Dust | 3 | 60 | 100 | 200 |
| Ozone | 1 | 100 | 100 | 100 |
Determination of K2:
| K2 = (100-index)/100 | dust | SO2, NOx, CO | all other |
|---|---|---|---|
| Budapest (all districts) | 60 | 60 | 50 |
| Range (min...max) of the index of the whole country | 20...80 | 10...70 | 10...60 |
STATUS
Introduced in 1993.
AIM
To assist the enforcement of the regulation on the
phasing out of the use of ozone depleting substances (implementation
of Montreal Protocol and Vienna Convention).
SUBJECT
Every person or legal organization who manufactures,
uses or imports substances controlled through the regulation.
OBJECT AND LEVEL
Fines can be imposed after the deadline for complete
phase out:
CFCs 1.1.1996 (total phase out) halons 1.1.1994 carbon tetrachloride 1.1.1996 methyl-chloroform 1.1.1996
The amount of the fine is 10 times the commercial price of the consumed substance. In case of repeated prohibited consumption, the fine is 100 times the commercial price. Repeated fines can only be imposed after 3 months.
INCOME
0
USE OF INCOME
The revenue goes to the Central Environmental Protection
Fund. So far it has not been decided whether the revenue will
be earmarked for ozone depletion related programs, or for general
air pollution related programs.
IMPLEMENTATION AND EFFECTIVENESS
The phase-out schedules are based on the monitoring
of respective substances that started in 1986. In some (so far
few) cases exceptions (permits) from the prescribed phase-out
schedule have to be made (for example in cases where very large
investments are necessary to comply with the regulations).
LEGAL BACKGROUND
Decree No. 13/1992 (V.12) KTM: update according to
modifications of the Montreal Protocol
Decree No. 22/1993 (VII.20.) KTM (MoE): Implementation
of the International Convention on the Protection of the Stratospheric
Ozone Layer.
EXECUTING AUTHORITIES
Design: MoE, Air Department.
Revenue collection: Regional Environmental Inspectorates.
Revenue use: CEPF Secretariat.
INFORMATION SOURCES
Personal enquiry. Respective legislation.
STATUS
Introduced in 1984. Modified in 1990.
AIM
To assist the enforcement of the Noise and Vibration
Protection regulations.
SUBJECT
In practice, large (and recently also small) manufacturing
and service institutions are subject to the fine. The fine can
be applied if a new institution/company is established as well
as if the noise values of an existing institution are exceeding
the limits determined by the environmental authority.
OBJECT AND LEVEL
Regular monitoring is carried out at some well-known
places. Additional monitoring takes place in the case of a complaint.
If noise standards are exceeded, the respective Inspectorate gives
a deadline to improve the situation. If this deadline is missed,
the noise fine is imposed.
The noise and vibration standards vary by regions. The fine depends on the nature of the establishment causing the noise and vibration, and the type of affected areas (e.g., residential, public, or workplace). The fine is calculated according to the formula given in the appendix. The modifications of the regulations in 1990 were the reaction to the growing number of small enterprises. A multiplier for small source noise emissions was added (CA, cf. calculation mechanism). The level of fines was not changed.
The environmental authorities may modify the fine calculated according to the formula by a factor of 0.2 -1.5, depending on circumstances. However, a factor higher than 1 may only be applied if the standard is exceeded by more than 10 dB(A) and if the noise is the result of an intentional action or serious careless behavior. The fine can be imposed once a year. Repeated non-compliance results in an increased fine by a factor of 1.5 (for the 2nd infraction) or 2 (for the 3rd).
INCOME
| imposed | collected (income to CEPF; excl. 30% to munic.) |
||
| 1990 | 10.7 mln HUF | = 0.13 mln ECU | |
| 1991 | 34.0 mln HUF* | = 0.37 mln ECU | |
| 1992 | 18.0 mln HUF | = 0.18 mln ECU | |
| 1993 | 25.3 mln HUF | ||
| * This amount includes some previously collected fines too, because in 1991 the final steps in the re-organization of the environmental Inspectorates took place. | |||
USE OF INCOME
Since 1991, 70% of the revenue goes to the Central
Environmental Protection Fund. The revenue is spent for CEPF programs.
30% goes to the respective municipal budget.
IMPLEMENTATION AND EFFECTIVENESS
Because of inflation, the fines are too low to provide
an incentive effect. Adequate monitoring of noise emissions is
not possible at the present. The fine for exceeding vibration
standards, which exists in the law, is not enforced. It is clear
that the enforcement has to be improved, but no official proposals
have been prepared so far.
LEGAL BACKGROUND
Decree 12/1983 (12.VI.) MT (Cabinet) : Noise and
Vibration Protection
Decree 4/1984 (23.I.) EüM (Ministry of Health):
Emission Standards in Noise and Vibration Protection.
Decree 12/1990 (V.23.) KVM : Noise and Vibration
Fine.
EXECUTING AUTHORITIES
Design of the fee: MoE.
Revenue collection and enforcement: Regional Environmental
Inspectorates.
Revenue spending: MoE, CEPF Secretariat.
PERSPECTIVES
New noise and vibration legislation is under preparation.
It is supposed to be adopted after the adoption of the framework
law. In the new legislation, also indoor noise emissions shall
be regulated. Studies are being carried out to modify the formula.
INFORMATION SOURCES
Personal enquiry. Respective legislation.
CALCULATION MECHANISM NON COMPLIANCE FINE ON NOISE AND VIBRATION.
, where
CA is calculated if (L+H) < 15. In any other cases, CA = 1.
B Fine to be paid
T The absolute value of exceeding the respective standard in dB(A): T = Tm - Ts (Tm = measured value; Ts = standard value). The maximal value for T that can be applied in the formula is 30.
L Number of rooms in residential buildings, in front of which windows the respective noise standard is exceeded. The maximal value for L that can be applied in the formula is 800.
H Number of rooms in institutional buildings, in front of which windows the respective noise standard is exceeded. The maximal value for H that can be applied in the formula is 200.
Standards (Ts) according to decree 4/1984. All values in dB(A).
For companies: day night
1. recreational areas 45 35
2. loosely populated residential and institutional areas 50 40
3. densely populated residential and institutional areas 55 45
4. industrial areas with residential buildings 60 50
For construction activities (day/night): for: <1 month 1 month-1 year >1 year
1. recreational areas 60/45 55/40 50/35
2. loosely pop. resident./ institut. areas 65/50 60/45 55/40
3. densely pop. resident./ institut. areas 70/55 65/50 60/45
4. industrial areas with resident. buildings 70/55 70/55 65/50
In addition, standards for noise caused by traffic (i.e., only for new roads or changed course roads) and for vibrations are determined. However, both are not enforced.
SPECIFICATIONS
Levied on the permitted quantity of water extracted.
The charge is associated with a procedure of permitting. A permit declares, among other things, what the allowed quantity of water extraction is and where the water comes from.
STATUS
In force since 1970. Modified in 1992 and last in
1993.
AIM
To encourage the efficient use of water resources,
as well as to ensure the most appropriate use of various water
sources (such as geothermal, therapeutic water etc.)
Environmentally friendly use of water is rewarded (e.g., re-direction of water used for geothermal purposes is exempt from the charge).
SUBJECT
Levied on who is extracting water from natural resources.
OBJECT AND LEVEL
A basic rate of HUF 0.8/m3 is established yearly (company water use is charged with 2.4 HUF/m3 and based on actual quantity extracted). It can be modified by several factors:
INCOME
Precise data were not available. The income is ca.
3-4 bln HUF per year.
USE OF INCOME
The revenue goes to the Water Fund (this charge is
the only revenue to the Water Fund).
65% of the Water Fund revenue is allocated through grants (upon application) and to 35% for "basic activities" of water management.
IMPLEMENTATION AND EFFECTIVENESS
Criticisms have been lodged that the income of the
charge should be spent more on protecting water resources and
water quality. The charge level is not high enough to give the
intended incentive.
LEGAL BACKGROUND
Act LXXXIII 1992. (Government)
Decree 33/92 (XII.31.) KHVM
EXECUTING AUTHORITIES
Ministry of Transport, Telecommunication and Water
Management.
INFORMATION SOURCES
Personal enquiry.
The charges are so-called "regulated prices" set by the Ministry of Transport Telecommunication and Water Management in the case of regional water works and by the municipalities in the case of municipal waterworks.
STATUS
Introduced in 1991.
AIM
To cover the costs of providing water and of sewage
treatment.
SUBJECT
The fee is paid by all those who are connected to
water pipes and/or sewage systems.
OBJECT AND LEVEL
The principle behind defining the fee level is charging
high enough fees to cover the full costs of an enterprise, including
reasonable profit and calculating the subsidies and taxes as well.
The waste water charge is generally based on a measured volume
of waste water. If the volume is not measured the base is the
total quantity of water used. The charge must be reduced by the
amount of subsidy that the Sewerage Company gets. Since the cost
of providing water and waste water treatment varies across waterworks
there are different charges defined for different regions. The
variation is quite large. The lowest value used to be HUF 11/m3,
the highest is HUF 84.3/m3.
Since the major portion of price setting is decentralized, only
information on regional waterworks is available. For the water
fee, the level varies between HUF 42/m3
and HUF 87/m3
and for sewage fees between HUF 34/m3
and HUF 130/m3.
INCOME
Not known.
USE OF INCOME
The income goes to the respective waterworks.
IMPLEMENTATION AND EFFECTIVENESS
There are two problems with the way the charge levels
are set. One is that the depreciation is based on the "old
value" of the equipment. Therefore, only very little accumulation
is possible for replacement.
The other problem is that in those rare cases where the effluent is properly treated the cost and correspondingly the charge is high. Meanwhile, Waterworks with no treatment costs charge less. These pay sewerage fines for their high level of pollution, but the level of that fine is far too low to provide any incentive to lower the pollution content of the effluent.
In practice, only operational costs of an enterprise can be covered, given the current rates. Necessary investments, e.g. for better technologies, are generally impossible without subsidies.
INFORMATION SOURCES
Personal enquiry.
STATUS
Introduced in 1984, fine levels increased in 1994.
AIM
Assisting the enforcement of effluent standards for
discharges into surface water.
SUBJECT
It is levied on point sources which discharge their
waste water into surface water.
OBJECT AND LEVEL
Fines are levied according to a formula that takes
into account the exceeding of effluent standards (defined in terms
of pollutant concentration), regional factors and how severely
the standards are violated. The unit fine is given by a table
for each polluting and toxic material. The calculation mechanism
is presented below.
INCOME
| imposed | collected (income to CEPF; excl. 30% to munic.) |
||
| 1990 | (The income from the waste water fine did not belong to the CEPF before 1991) | ||
| 1991 | 170.7 mln HUF* | = 1.8 mln ECU | |
| 1992 | 236.0 mln HUF | = 2.3 mln ECU | |
| 1993 | 156.2 mln HUF | = 1.5 mln ECU | |
| * This amount includes some previously collected fines too, because in 1991 the final steps in the re-organization of the environmental Inspectorates took place. | |||
USE OF INCOME
Since 1991, 70% has been paid into the Central Environmental
protection Fund. The revenue is also used for water protection
measures and subsidies for waste water treatment plants. 30% is
general revenue to the budget of the respective municipality.
IMPLEMENTATION AND EFFECTIVENESS
Even after doubling the fine levels recently, they
are many times lower than the costs to substantially remove the
pollutants. With respect to this, the fines can be considered
as permits for pollution as there is no other enforcement tool
of the effluent standards. Even the revenue raising function of
the fine is not fulfilled very effectively. The fine is levied
on industrial enterprises, many of which are in financial trouble.
Therefore, they often do not pay the fine. The calculation of
the fine is based on pollutant concentrations. With which load
the pollutants are emitted is not a criteria. It happens in practice
that the waste water is being diluted with clean water to reduce
the concentrations when there is monitoring. Monitoring takes
place punctually, it would be better to have 24h samples. The
relation between the waste water fine and the sewerage fine is
not comprehensive and coordinated enough resulting in unintended
incentives.
LEGAL BACKGROUND
Law IV of 1964 on Water.
Decree 32/1964 (xii.13.): implementation of the Water
Act.
Decree 3/1984 (vii.7.) OVH
Decree 33/93 MoE: higher fine levels
EXECUTING AUTHORITIES
The fine is calculated, imposed and enforced by the
respective regional environmental authority (Inspectorate).
PERSPECTIVES
A complete overhauling of the fine system in the
water sector is expected. New water legislation has not yet been
drafted.
INFORMATION SOURCES
Personal enquiry. Respective legislation.
CALCULATION MECHANISM FOR THE WASTE WATER FINE.
B is the charge to be paid for the year.
q is the amount of waste water discharged in m3/day.
n is the number of days the plant has discharged during the respective year.
Ci is the concentration of a specific pollutant in mg/l.
CLi is the limit value concentration of the specified pollutant in mg/l.
Fi is the charge for the pollutant in HUF/kg.
a is the factor relating to the use of the receiving water.
b is the factor relating to the dilution capacity of the receiving water (ranges from 0.3 to 1.0).
p is a factor based on the treatment plant's previous record.
w is a factor relating to other water management considerations to the site.
e is a factor to penalize severe polluters.
Key for a:
Water use (area categories) Factor
1. Prominent water quality areas 5.0 2. Sources of drinking waters and recreation areas 3.5 3. Industrial areas 3.0 4. Sources of irrigation waters 2.0 5. Non-prominent Danube and Tisza reaches 1.0 6. Other areas 1.0
CLi and Fi for some pollutants (a total of 19 'polluting substances' and 13 'toxic substances' are determined)
* For categories I and II it is to be applied in all cases, while for categories III, IV and VI, it should be applied only to waste waters discharged to standing water bodies
Substance Area limit value categories Fi 1. 2. 3. 4. 5. 6. [HUF/kg]
Nitrate [mg/l]* 40 50 80 80 - 80 2 Total phosphorus [mg/l]* 1.8 2 2 2 - 2 80 Sulphides [mg/l] 0.01 0.01 2 2 5 22 200 Phenols [mg/l] 0.1 0.1 3 3 3 3 100 Organic solvents [cm3/m3] 0.05 0.05 0.05 0.05 0.05 0.05 200
STATUS
Introduced in 1984, fine levels increased in 1994.
AIM
Assisting the enforcement of effluent standards for
discharges into sewage systems.
SUBJECT
It is levied on non-household point sources which
discharge their waste water into the sewage system.
OBJECT AND LEVEL
The fines are levied according to a formula that
takes into account violations of effluent standards (defined in
terms of pollutant concentration), regional factors and how severely
the standards are violated. The unit fine is given by a table
for each polluting and toxic material.
INCOME
1991: 2.1 million ECU (estimation - official data are not available, it is the sole authority of the municipality)
USE OF INCOME
It is paid to the company that operates the sewage
treatment plant for covering part of their extra costs associated
with the higher level of pollutants.
IMPLEMENTATION AND EFFECTIVENESS
It is mostly levied on industrial enterprises that
are having financial trouble. Therefore, they often do not pay
it: the level is too low both for having any real enforcement
power and/or covering a substantial part of the extra treatment
costs.
LEGAL BACKGROUND
Law IV of 1964 on Water
Decree 32/1964 (xii.13.): implementation of the Water
Act
Decree 4/1984 (vii.7.) OVH
Decree 34/93 MoE: higher fine levels
EXECUTING AUTHORITIES
The fine is calculated by the Regional Environmental
Authority but imposed by the municipality.
PERSPECTIVES
Fine levels have been doubled recently, however,
a complete overhauling of the fine system in the water sector
is expected. New water legislation has not been drafted so far.
INFORMATION SOURCES
Personal enquiry. Respective legislation.
STATUS
Introduced in 1981. Modified in 1993.
AIM
Assisting the enforcement of waste regulations. Inappropriate
waste management/handling can be penalized.
SUBJECT
Levied on producers and disposers of hazardous waste.
Waste management is registered at the self-declaration of the companies (the declaration includes where, how, and how much waste is handled). The Regional Environmental Inspectorates are responsible for checking the accuracy of the declarations.
OBJECT AND LEVEL
Approx. 235 hazardous waste types are specified (a
substance which is not in this list, is considered as non-hazardous
until the contrary is proven).
The fine is levied if
In case of repeated violations, the fine can be two (first time repeated) or five times higher. The minimum fine in residential or protected areas should be three or five times higher respectively.
The fines are calculated according to the formula given below.
INCOME
| imposed | collected (income to CEPF; excl. 30% to munic.) |
||
| 1990 | 13.7 mln HUF | = 0.17 mln ECU | |
| 1991 | 64.0 mln HUF* | = 0.69 mln ECU | |
| 1992 | 38.0 mln HUF | = 0.37 mln ECU | |
| 1993 | 44.2 mln HUF | = 0.41 mln ECU | |
| * This amount includes some previously collected fines too, because in 1991 the final steps in the re-organization of the environmental Inspectorates took place. | |||
USE OF INCOME
Since 1991, 30% is non earmarked revenue for respective
municipal budget.
70% goes to the Central Environmental Protection Fund and is used for CEPF programs.
IMPLEMENTATION AND EFFECTIVENESS
Due to the shortage of staff in the Inspectorates
the implementation is not too effective.
Companies want to keep and use the penalty fines to solve the problems themselves.
The hazardous waste issue is especially important in the privatization process as it is directly related to the problem of accumulated past pollution. In regards to this issue several questions are still open.
LEGAL BACKGROUND
Decree 56/1981 (18.XI.) MT ( Cabinet); modified by
Decree 27/1992 (I.30.) MT (Cabinet): hazardous waste decree
Decree 2/1981 (18.XI) OKTH (National Environmental
Protection and Nature Conservation Agency); modified by Decree
2/1993 (II.9.) KTM (MoE): on the hazardous waste fine.
EXECUTING AUTHORITIES
Design: MoE.
Enforcement: Regional Environmental Inspectorates.
Revenue collection: municipalities/CEPF.
PERSPECTIVES
The classification list of hazardous substances will
be changed (it is expected to be adopted in 1994). The list is
supposed to be in accordance with the schemes of the Basel Convention
and other international recommendations. It has also been proposed
to shift the responsibility/power to change this list from the
Government to the MoE.
In the draft framework environmental protection act, it is proposed to earmark the revenue which goes to the municipalities for general environmental purposes.
New waste legislation is under preparation at present, however, there is no connection to the fine system on hazardous waste so far.
INFORMATION SOURCES
Personal enquiry at MoE. Respective legislation.
CALCULATION MECHANISM FOR THE HAZARDOUS WASTE FINE:
B = S x V x M
B: fine imposed [ HUF ];
S: index related to the quantity of waste in t
V: index related to the class of hazard
M: factor related to the type of non-compliance (cf. cases a) - c) as described above)
| Key for S: | Key for V: | Key for M: | ||||||||||||||||||||||||||||
|
|
|
The fine does not have to be paid if the production per year is less than 1 ton of category III waste or less than 0.1 ton of category II waste.
STATUS
In force since 1987.
AIM
Stopping the import of waste. Waste used for recycling
is exempt (if the respective authorities give permission). Waste
used for energy recovery is not exempt. Waste is defined as any
material that cannot or will not be used for the primary purpose
of it.
The regulations are in harmony with the Basel Convention.
SUBJECT
Levied on the importer of illegal waste.
OBJECT AND LEVEL
It often happens that illegally imported waste is
only detected within the country, without having been declared
as such. If the importer of the waste can be identified, the illegal
waste import fine has to be paid. Additionally, the waste can
be sent back by the authorities and the environmental authorities
can oblige the importer to decontaminate or restore the original
situation.
The fine is 100,000 HUF per each 'started' ton of illegal waste.
INCOME
Not known (very little, if any).
USE OF INCOME
The revenue goes to the Central Environmental Protection
Fund.
IMPLEMENTATION AND EFFECTIVENESS
Revenue from this fine is almost non-existent, mainly
because of the very few enforceable cases occurring.
LEGAL BACKGROUND
Decree 55/1987 (X.30), Council of Ministers.
EXECUTING AUTHORITIES
Imposing + enforcing: respective regional environmental
Inspectorate.
Revenue use: CEPF.
PERSPECTIVES
There are proposals to change the current regulations
in such a way that the illegal export of waste can also be fined.
INFORMATION SOURCES
Personal enquiry.
STATUS
Introduced in 1982. Modified last time in 1990.
AIM
To assist the enforcement of nature conservation
regulations.
SUBJECT
The fine is levied if certain behaviors and activities
violate nature conservation regulations. It can only be levied
on organizations (e.g., companies, associations), not on individuals.
Against individuals, an administrative procedure for offence can
be followed by local public authorities (the maximum fine is 10,000
HUF). Nature conservation guards or the police can levy an in
situ fine of 2,000 HUF.
OBJECT AND LEVEL
In the regulations, fixed penalties are applied:
For activities incompatible with the statutes of
nature conservation areas, maximum 20,000 HUF per hectare (within
one hectare). For activities incompatible with the statutes of
natural heritage areas, maximum 200,000 HUF per hectare. For changing
or transforming without a permit, or injuring and inflicting other
damages in any part of a nature conservation area, maximum 100'000
HUF per hectare or 1,000,000 HUF per hectares in a natural heritage
area. For changing, transforming, injuring and inflicting other
damages without permits in caves, maximum 1,000,000 HUF (within
100 m2). For any unpermitted
activity which affects a specimen of protected animal or plant
species, or for disturbing the reproduction of strictly protected
animal species, the maximum fine is the established value of a
specimen. For endangering the survival of protected animal or
plant species and for destruction of such specimens, the maximum
fine is tenfold of the established value of an affected specimen.
INCOME
| imposed | collected (income of CEPF) |
||
| 1990 | 0.2 mln HUF | = 2500 ECU | |
| 1991 | 0.4 mln HUF* | = 4300 ECU | |
| 1992 | 0 HUF | ||
| 1993 | 0.2 mln HUF | ||
| * This amount includes some previously collected fines too, because in 1991 the final steps in the re-organization of the environmental Inspectorates took place. | |||
USE OF INCOME
The revenue from the fine goes to the Central Environmental
Protection Fund while the revenue from administrative fines goes
to the Central State Budget.
IMPLEMENTATION AND EFFECTIVENESS
The fine is only applicable for organizations but
most of the damages are caused by individuals. The administrative
fine is very low. Therefore its preventive effect is weak. Furthermore,
the procedure is slow and the local authorities are inactive in
those cases.
In many cases administrative authorities give licenses for investments and activities which can damage nature, without the agreement of the nature conservation authorities. In such cases there is no legal basis for the nature conservation fine if nature is actually damaged. Also, there is usually no legal way for the nature conservation authorities to ban such activities.
The fine is not a tool for restoration of damaged values. Existing tools for this are very ineffective.
LEGAL BACKGROUND
Decree Tvr. 4/1982 of the Presidential Council.
Decree 8/1982(15.III) MT, modified by 58/1982(10.XII.)
MT and 88/1990(30.IV) MT.
EXECUTING AUTHORITIES
National Park Directorates and Nature Conservation
Directorates.
PERSPECTIVES
A new nature conservation law is under preparation.
In this context, the regulations on fines shall be changed, i.e.
fines should be levied repeatedly, administrative fine levels
should be increased and the authority for administrative procedures
and fines should be passed to the National Park and Nature Conservation
Directorates.
Tools for restoration of damaged values must be strengthened.
The cooperation between central and local administrations must be developed.
INFORMATION SOURCES
Personal enquiry. Respective legislation.
AIM
The declared aim is revenue raising for protective
measures for transport related pollution problems.
Because of the low level of the charge, a direct incentive impact should not be expected, a more substantial impact on gasoline consumption resulted from the drastic gasoline price increase in 1991 (about 65%).
SUBJECT
Domestic fuel producers; importers of fuel when they
sell it or when it is used for their own consumption.
OBJECT
Gasoline, diesel oil, lead free fuel.
LEVEL
HUF 667/ton gasoline
HUF 595/ton diesel oil
Responding to the price per ton (since 1.1.1994):
HUF 0.8/l on all types of fuel (this is approx. 0.7
- 1 % of the total fuel price). Since Nov. 1994 1.0 HUF/l.
INCOME
| imposed | collected (income of CEPF) |
||
| 1992 | 879 mln HUF | = 8.6 mln ECU | |
| 1993 | 1461 mln HUF | = 13.6 mln ECU | |
| * This amount includes some previously collected fines too, because in 1991 the final steps in the re-organization of the environmental Inspectorates took place. | |||
USE OF INCOME
The revenue goes to the Central Environmental Protection
Fund.
75% of the sum is earmarked for a yearly program on transport related pollution, reducing air pollution in heavily polluted cities, abatement measures and raising public awareness.
25% of the sum can be allocated by the Minister of Environment and is not so strictly earmarked for transportation issues (issues for spending provided: nature conservation, raising public awareness etc.)
IMPLEMENTATION AND EFFECTIVENESS
The introduction of the charge was relatively easy
because of its low level relating to the total price. (originally
a higher charge level (HUF 1.1/l) was suggested including a tax
differentiation that would have favored the unleaded gasoline.)
After consultations with the interest groups and other ministries,
a charge level of HUF 0.5/l was introduced.
In the starting phase, the revenue spending process was slow, mainly because a plan for spending the revenue had to be elaborated first.
The subsidy scheme and procedures are criticized as being not really 'open to the public'; past habits still brought about privately negotiated and agreed deals between officials and companies.
LEGAL BACKGROUND
Act XVIII, 1992 on the environmental fee on fuel.
Act No. LXXXIII of 1992 on the Central Environmental
Protection Fund (CEPF), and Ministerial Decree No. 20 of 1993
(IV.23) on its execution.
EXECUTING AUTHORITIES
Design of the instr.: MoE, CEPF Secretariat.
Revenue collection: MoE, CEPF.
Enforcement: MoE, Department of Economics and Budget,
Environmental Inspectorates
Revenue use: MoE, CEPF Secretariat.
PERSPECTIVES
An action plan on the improvement of the air quality
in highly endangered regions of Hungary is under development.
In conjunction with this plan, a spending program for air pollution
abatement measures is being prepared which will be financed to
ca. 50% by the revenue of the fuel charge.
INFORMATION SOURCES
Personal enquiry at MoE, MoF.
AIM
An incentive effect is intended to reduce the amount
of packaging material and for recycling the material.
SUBJECT
The charge is levied when the material is being imported
or produced within the country.
OBJECT
The charge is levied on "package that has volume",
out of glass, metal, plastic or laminated material (not: paper
and wood).
LEVEL
The level of the charge depends on the volume of
the packaging material. The following basic rates have been proposed:
Volume rate for materials out of PVC (liters) (HUF/piece) (HUF/piece)
0.11 - 0.30 3 5 0.31 - 0.70 5 7 0.71 - 1.00 7 9 1.01 - 2.00 9 11 2.01 - 15.00 11 13
If more than a specified amount of packaging material is being 'treated' (recycled or burnt), the charge would be reimbursed. The charge is calculated by the formula:
T = d x (h - s) x m
T: charge to be paid.
d: basic rate (if 100% of the charge has to be paid)
h: mandatory percentage for reuse (above this, the charge does not have to be paid)
s: reuse of pack. mat. fulfilled in %
m: quantity (pieces) of pack. mat. of a certain volume
INCOME
Expected revenue per year: 500 - 1000 million HUF (under the assumption h - s = 10% )
USE OF INCOME
The revenue is supposed to be used for the support
of actions that prevent a negative impact of packaging materials
on the environment (e.g. credits, subsidies for companies which
recycle packaging materials).
IMPLEMENTATION AND EFFECTIVENESS
The administrative costs shall be not more than 3.5%
of the revenue.
LEGAL BACKGROUND
Under preparation.
EXECUTING AUTHORITIES
The instrument has been designed by the Ministry
of Environment.
PERSPECTIVES
An advisory board consisting of 4 experts from each,
Government, Industry, Municipalities and citizen organizations
will decide upon the height of the compulsory rate h.
Paper and wood shall eventually be included in the materials being charged.
INFORMATION SOURCES
Personal enquiry at MoE.
At present, in practice the level of deposit rates depends on voluntary negotiations between industry and retailers.
STATUS
It has been in force for decades, though the currently
valid regulations are from 1990/91.
PRODUCT(S) AND RATE
There are different deposit amounts for various types
of bottles. The most important are beer, wine, and soft drink
beverages packaged in glass. The system does not work for conserving
glass.
Examples
Type Deposit rate (est.) % of the products' market price (est.)
0.7 l wine bottles (glass) ca. 6-8 HUF/bottle < 10% 0.5 l beer bottles (glass) ca. 5-6 HUF/bottle ca. 15 - 20% 1 l soft drink bottle (glass) ca. 12-20 HUF/bottle 30 - 50%
EFFECTIVENESS
The most common types of bottles (wine, beer, soft
drinks) always had about a 70-80% return rate. In 1991, the return
rate of beer bottles was 103% (official statistics); the 'import'
from neighbor countries contributed. Since 1991, the return rates
decreased (except for beer bottles) to about 50% (estimates).
The market shares of refillables are estimated as follows:
IMPLEMENTATION
This instrument has a long tradition. The trend now
is that the system works only for such types of bottles for which
the refilling is economical. The new experience with returnable
PET bottles was the result of a business initiative, motivated
by the proposal of the new regulations on packaging material in
preparation.
EXECUTING AUTHORITIES
Relating to design and implementation of this instrument,
the following authorities are involved:
PERSPECTIVES
As an element of the planned product charge/deposit
refund system on packaging material it is proposed to introduce
a compulsory take back for specific types of bottles (including
wine and beer glass bottles). These changes are under preparation
in the Ministry of Industry and Trade. The proposals are still
in an early stage.
INFORMATION SOURCES
Personal enquiry at MoE, MoF.
