This section consists of six sub-sections. The first one reviews the existing environmental fees and mechanisms of their redistribution for environmental investment purposes. The assessment of their role is included in the second sub-section. Sub-section three discusses other economic instruments currently applied in Poland's environmental policy. Sub-section four discusses the economic consequences of environmental fees, especially with respect to the largest industrial polluters. The next section explains the potential role for new market-oriented instruments and, most importantly, permit markets. Finally, sub-section six concludes the section by offering several recommendations on how the current system could be improved.
Initially, Poland's environmental fees were indeed rather low. However, they were adjusted several times to reach their peak pre-reform level in 1987. It should have been obvious though that even this relatively high level confronted with the logic of non-market allocation could not provide sufficient incentives for polluters. The system could not have any major impact on the scale of environmental protection activities.
Faced with increasing inflation and lacking confidence in "environmental attitudes" of the government, in 1989, environmentalists managed to introduce legislation pegging fee rates to the official inflation index. The intention was to remove the setting of fee levels from the whim of politicians. Unfortunately, the proponents did not realize that the fees were pegged to the ex post index which, at best, becomes available by the middle of the year after the one the fees apply to. As a result, the three-digit inflation in the second half of the 1989 made the real value of fee rates negligible in 1990.
In 1990, the Ministry of Environment (MoE) convinced the Parliament to de-couple fee rates from the inflation index. At the same time, it convinced the Council of Ministers to significantly increase these rates not only to make up for the historical inflation losses and to recover the level of the 1987 fees in real terms, but also to match the ex ante predicted inflation. The argument applied proved to be good enough to arrive at fees even higher than in 1987. The new rates became effective in July 1990 and kept rising in real terms until 1992. Because of a series of chaotic political developments in 1992, both charging principles and charging rates were somewhat changed throughout the year. This resulted in revenues of environmental funds being 32% lower than planned. On April 1, 1993, new rates became effective. They largely recover the early 1992 status, although there is a moderate decline in their real value. For instance, the SO2 charge - the single most important source of environmental funds' revenues in Poland - decreased from $80 to $72 per ton (at the exchange rate of 16,600 zl/$ - the prevailing rate in April 1993). Throughout the year its real value decreased even further due to double-digit inflation.
Despite that, Poland has become a country with fairly high pollution fees. A series of significant rate increases (supplemented with a new system of more frequent collection) changed the operation of the system dramatically. Polish fees are not negligible any more, and, in fact, they rank among the highest in the world now. Despite the economic recession, the environmental public funds originating from fees are now annually collecting and spending 15 20 times more in real terms than in 1990. In 1991 they channelled as much as 40% of Poland's environmental expenditures, the rest being financed mostly from polluters' own resources. In 1992 Poland's pollution fees claimed almost $500 million, i.e. roughly .5% of the country's GDP. Of this sum $170 million was administered by the National Fund. Almost half of the Fund's revenues came from three charging items:
(the last two items were claimed by the National Fund only - i.e. they are not shared with regional funds; now the nitrogen oxide charge is shared with respective local funds).
In addition to pollution and resource fees, "geological" ones have been in use. Throughout the 1980's a fund collecting "extraction fees" was in operation. The fund sponsored geological exploration and prospecting activities channelling approximately $10 million per year. In 1991 the fund was discontinued as inefficient, and geology was financed mostly from the state budget. In 1992 fees were re-established, but principles of their collection have changed, and their rates have increased. Geological concession fees are to be collected on the basis of the estimated value of the deposit minus exploration costs (because of incomplete regulatory framework they were not collected in 1992). Mining (extraction) fees are based on the price of extracted minerals. According to the Mining Act, 50% of these fees is claimed by municipal budgets (without earmarking); the other 50% is channelled to the National Fund and earmarked in the following way:
In 1992 the National Fund collected $21 million from mining fees, i.e. 56% of the amounts due. Liquidity problems of coal mines are largely responsible for the poor collectability.
A Forestry Fund has been operated by the State Forest Administration. The main sources of the Fund's revenues are: fees for converting forest land to non-forest uses, top-soil sales, a surcharge on state forest operations costs, and other payments stipulated by the Forestry Act of 1991. The Fund spends money on afforestation/reforestation projects, as well as on pollution damage remedies. In 1991 it channelled $296 million, a part of which can be considered an environmental protection or nature conservation expenditure (even though it is not according to Poland's statistical classification rules).
The Farmland Protection Fund collects its revenues from: soil fees - mostly for converting agricultural land to non-farm uses (in 1991 - $9 million), top-soil sales, and other fees and fines stipulated by the Farmland Protection Act (of 1982). 20% of the revenues of the Fund are distributed by the Minister of Agriculture, and 80% by the 49 regional administrators. The 1991 disbursements (of $8.1 million) were as follows:
As seen from this breakdown they can only marginally be linked to environmental and resource protection activities.
To the extent that the fees listed in this section subtract from taxable incomes, and most of them are redistributed for environmental policy purposes in the form of subsidies, they can be viewed as an indirect budgetary contribution of the state to environmental investment programs. There are also non-compliance fees (usually calculated as multiples of the regular ones) in use. In contrast, these - according to the accounting rules applied in Poland - are payable from after-tax incomes. Their incentive effect is, therefore, potentially higher than in the case of regular fees. However, because of their very low collectability their actual impact is moderate.
It has been well documented that pollution fee systems failed to protect the environment in Poland and elsewhere in Central and Eastern Europe. [See e.g. Zylicz (1991) for a brief analysis of environmental protection failure in former centrally planned economies.] Their effectiveness was thus low. Two factors were responsible for this: low rates, and the lack of incentives to save on costs. Both have been removed or at least weakened now, and one can observe how the pollution fee system in Poland starts to bring the first positive results. These, however, cannot be entirely attributed to the increased fees and the emergence of cost-minimizing behavior. Rather, they are a combined outcome of the overall market reforms, a more consistent use of direct regulations, and higher fees.
First of all, switching to market logic let the economy eliminate some of the most outrageous examples of wasteful uses of resources. This, in turn, contributed to lower emissions of many pollutants (Zylicz 1994). Also, after 1989, the government attempted to solve the enforcement problem by making more courageous use of administrative instruments, including forced shut-downs. It also tried to change the concept of the non-compliance fine so that most violations of environmental requirements would trigger an administrative action (non-compliance fines should only be assessed in the case of accidental spills). This, however, turned out to be more difficult than expected, and non-compliance fines still are collected (or at least assessed) in some "chronic" cases too. An effective alternative to a shut-down would be a marketable permit option. However, because of the insufficiency of the existing legal framework, exercises of that kind can be done on an "experimental basis" only (Dudek, Kulczynski and Zylicz 1992).
Some fees already provide quite strong incentives to abate pollution. The sulphur dioxide rate was roughly $80 per ton of emission. Even after reducing it to $72, this is higher than almost anywhere in the world. A number of mines are reported to have undertaken investment in coal-washing equipment, as a result of the decline of demand for high-sulphur coal. With respect to other pollutants charge rates are also high in comparison to those used in OECD countries. However, even this high sulphur dioxide fee is still lower than the marginal costs of, say, permanent 30% reduction estimated at $500-600 per ton of sulphur dioxide abated.
The efficient - "Pigouvian" - level, as understood by policy theorists (i.e. equal to the marginal cost of abatement needed to meet policy objectives), is in Poland roughly eight times higher than the current one in the case of e.g. sulphur dioxide. Although still higher than typically charged rates, average abatement costs are several times lower than marginal ones. The current level of rates thus serves as a means to raise revenues rather than a means to create incentives for reduction in pollution (as in most applications world-wide). It is simply aimed at raising funds to secure an adequate public share in financing protection and recovery. This share should be kept within reasonable limits. The needs for public fund involvement, however, are rather wide in the period of recovery from the backlog of past neglect.
As a result of policy steps taken in 1990-91, environmental investment expenditure in Poland reached $1.3 billion in 1991. Of this sum, $840 million were spent on the environment sensu stricto, i.e. excluding water retention and water supply systems. Many environmentalists would insist that water retention and water supply is more a cause of environmental problems than their solution. The remainder of the analysis is therefore confined to this narrow definition of environmental protection.
The 1991 expenditure in real terms was almost 50% higher than in 1990 (the previous most successful year). Its percentage share in the country's national income grew from 1.1% to 1.6% according to the statistical methodology applied in previous years (MPS, constant 1984 prices). It turns out, however, that prices for environmental protection goods and services grew at a slower pace than the overall inflation index. Thus, if evaluated at current prices, the percentage share increased only from 0.9% to 1.3%. Finally, Poland's Gross Domestic Product (according to the SNA methodology) is larger than its earlier estimates. Taking this into consideration, it can be concluded that the environmental investment expenditure grew from 0.7% of GDP in 1990 to 1.1% of GDP in 1991. Anyway, for the first time ever, Poland reached a relative level of environmental investment effort commensurate with what is spent per unit of GDP in the OECD countries.
The increase of expenditures was achieved despite eliminating - as economically inefficient - major tax allowances (which have existed since long ago) for environmental investors. 1990 was the first year for Polish enterprises to face hard budget constraints. (In centrally planned economies firms faced "soft" budget constraints (Kornai 1985), i.e. they were constrained not by financial but rather by physical flows or administratively allocated resources.) Simultaneously, it was the last year of income tax allowances for enterprises which undertake environmental investments. It is thus obvious that 1990 was the only year ever for those allowances to work. Large numbers of allowances were granted by tax authorities. Occasionally, MoE was consulted whether an investment complied with the definition of an "environmental project". Since the Tax Law was vague on that issue, all modernization projects - which typically somewhat improved environmental performance of the plant - could have been considered for the allowance. On the other hand, a too liberal interpretation of the Law would have resulted in a collapse of the state budget. And so, its actual application had to be a compromise. The Economics Department at MoE developed an interpretation of the law referring to two criteria: technology and impact. The former was satisfied if the restructurization project in question introduced an environmentally sound technology whose acquisition or development was of interest to Poland; the latter took into account the number of population affected by its effects. Despite the fact that many projects were deprived of a potential subsidy, this narrowing interpretation was never challenged. Interestingly, the elimination of these tax allowances in 1991 turned out to be more than compensated by the expanded activities of environmental funds.
The recent incremental expenditures correspond thus to the rapid increase in pollution charges and non-compliance fines which - until 1993 - were redistributed through the National Fund, and its 49 regional counterparts. From 1993 on they are distributed through more than 2000 local funds as well. The estimated breakdown of financing the overall investment of $840 million was in 1991 as follows:
Similar patterns of expenditures were estimated in 1992 and 1993.
It should be noted that 95% of the expenditure was financed from various domestic sources. Another interesting feature is a marginal (direct) contribution of the state budget. In principle, only nature conservation projects (and certain afforestation activities) are eligible for state budgetary support. However, for historical reasons, there are still some municipal sewage treatment plants being financed from the budget (at least partially). In contrast, municipal budgets (even net of loans taken by municipal entities) contributed almost 14% to environmental investment expenditures in 1991.
In 1992, despite problems with maintaining the initially planned level of fees, environmental funds managed to collect and spend $483 million, i.e. 44% more than in 1991. Overall the high level of investment was sustained in real terms, but there was no further significant increase. As a result, the environmental fund's share became 58%. On the other hand, this underscores the critical role of the Polish pollution fee system in the environmental recovery process. However, it reveals how fragile the enforcement of environmental protection measures is: the direct expenditures from polluters own sources decreased immediately in response to the political turbulence resulting in the decline of competence and prestige of the MoE in 1992. In 1993 the share of environmental funds decreased below 50% again.
It is too early to observe any spectacular effects of the newly implemented policies. The government has not succeeded in restoring the environment yet. Nevertheless, it would be inappropriate to claim that its new policies have been fruitless even during this take-off period (Zylicz 1994). There are hardly any signs of an ecological miracle in Poland. But there were no ecological miracles anywhere else in the world. In all regions which succeeded in recovering from an ecological catastrophe - like London, Pittsburgh or the Ruhr Basin - the success was achieved gradually, as a result of lengthy investment programs. Their effects became visible only after years of steady investing. Seen from this point of view, the pollution fee system in Poland has become an effective fund raising mechanism, which is a key element of environmental recovery.
However, the efficiency of this mechanism is questionable on several grounds. First, the fee lists - especially those for air pollutants - are excessive if confronted with the country's monitoring capacity. Second, the differentials in fee rates across various pollutants are not necessarily justified in terms of their marginal damages. Third, equity measures this system incorporates - especially in the case of water pollutants - impair its efficiency even further.
Additional distortions result from the method of recirculatng the fees. Three categories are earmarked for the uses they originate from: saline coal-mining waters, sulphur dioxide, and nitrogen oxides. The distortion caused by this (assuming that fee rate differentials across various pollutants do not necessarily correspond to the differentials in marginal damages from pollution) is, however, mitigated by the freedom of choosing any abatement project in any region. Thus, for instance, fees collected from a power plant do not have to be spent on expensive end-of-pipe treatment, but, instead, may be used to co-finance a coal-washing project elsewhere.
Much more severe distortions are caused by the fact that, in net terms, Poland's environmental funds have acted as agencies transferring resources from manufacturing industries to municipalities thus reinforcing wrong signals sent to the household sector. This is yet another example of how equity concerns interfere with efficiency of the fee mechanism. On top of that there are poor project screening and assessment procedures which sometimes lead to the selection of projects that are not cost-effective even in their respective narrow category of abatement (such as sulphur removal, municipal waste abatement and so on).
To sum up, Poland's extensive resource and pollution fee system makes a key contribution to environmental policy. Fee rates are high by OECD standards, but still below their respective Pigouvian levels. As a result they primarily act as fund-raising tools. In so doing, they have been instrumental in dramatically increasing the country's environmental investment expenditures which they now contribute more than a half of. Since they are typically below efficient levels they cannot be relied on as exclusive guides for carrying out environmental policies. Their inefficiency is further impaired by insufficient spatial differentiation of fee rates, and their excessive differentiation (motivated by equity considerations) across uses and users.
The fee system was de-centralized in 1993. Fees collected, previously shared by the National Fund and a respective regional one, are further shared with municipal funds. While the effectiveness of the revised mechanism is disputable, its economic efficiency will certainly decrease. There will simply be a thinner layer of money dispersed more evenly, which will stretch the average construction period of projects. Moreover, nation-wide environmental priorities will be less likely to receive adequate support. Nevertheless pleas to claim pollution fees at the local level where the pollution actually takes place were difficult to resist.
Envisioning the fee de-centralization process as inevitable, in 1990 the MoE tried to introduce a fuel charge (on top of the existing excise taxes) of average 4% earmarked for environmental protection. The charge on liquid fuels, natural gas, and lignites can raise as much as $300 million per year (hard coal should be added to the list as soon as its price is fully freed from state subsidies). A certain degree of rate differentiation was also suggested so as to account for different qualities of fuels (e.g. 8% for leaded vs. 2% for unleaded petrol, and so on). The proposal met with almost unanimous opposition of political groups. The official opinion of the "Solidarity" labor union was typical. It read: "While the union is for environmental protection, it will not approve any such burden laid on the impoverished society". Later in 1991, without success, the charge was again on the political agenda, this time in the form of initiatives of small groups of "green" members of Parliament (independently in the Lower and Upper Houses of the Parliament). In 1994 it resurfaced once more as a revised proposal of the MoE.
The resistance to introducing product charges - like the one described above - which are thought of as a source of revenues for the National Fund is inconsistent with the widespread expectation that 100% of emission fees and non-compliance fines should be retained at the regional or even municipal level. As long as it is also expected that some funding from a central fund has to be available, the only way to reconcile the two propositions - without totally ignoring the Polluter Pays Principle by charging the general taxpayer - is to accept the idea of product charges. These charges (levied on environmentally harmful goods), which cannot be convincingly claimed by any single regional or municipal administration, make a natural source of centrally managed revenues. Therefore, MoE has proposed that emission fees be fully de-centralized but only when product charges are established to make up for the resulting "losses" by the National Fund. However, prospects for introducing such charges are still dim.
Generous tax advantages for investors who spend on environmental projects were discontinued in 1991. Nevertheless, there are still some allowances which marginally improve the profitability of environmental investments, recycling, conservation, etc. The following is the list of such titles (Paradysz 1992):
The sales tax in Poland (substituted with VAT in July 1993) differentiated among various product and service categories. As a rule, basic consumption goods were taxed lower than those considered as luxuries (e.g. hi-fi consumer electronics, alcohol, cigarettes, etc). Also, liquid fuels are subject to taxes much higher than average. Taxes on petrol are now on the order of 50% of the retail prices, i.e. they are certainly much higher than in the United States, but still lower than in the European Union.
The MoE has consistently postulated to differentiate petrol taxes so as to make the price of lead-free brands slightly cheaper than the corresponding leaded brands. While, in principle, nobody objected to this idea, the inability of tax officers to effectively check for the lead content of imported fuels (declared as lead-free) postponed its implementation until 1992.
The MoE has also postulated differentiation of tariff duties so as to provide incentives for importers to substitute environmentally friendlier products for "dirtier" ones. However, only in the case of passenger cars has such a principle been implemented. There is a complete ban on the import of cars which are more than 10 year old. For newer cars, the amount of duty increases with their age. Other proposals were to lower or, perhaps, even abandon, duties on environmental protection goods, and monitoring equipment. Likewise, there was a proposal to apply very low import duties on products whose competing domestic manufacturers were heavy polluters. Almost none of these proposals, however, was incorporated into the new tariff system established in 1991. The government decided not to overburden the system with excessive allowances, as it was already one of the most liberal in the world. Administrative efficacy was another argument for limiting the differentiation.
A number of fiscal measures implemented by the government act as de facto environmental taxes/subsidies. Whilst their incentive role is moderate, they positively contribute to the process of fund-raising. Since they can be seen as indirect subsidies, their efficiency requires serious analysis, especially now with the state budget coming under increasingly close scrutiny in Poland. Given the fact that these measures were introduced either on an ad hoc basis - as "green" ornaments to various bills and regulations - or as a quick compromise between various departments within the government, their efficiency seems to be questionable (even though no rigorous studies exist to prove this). So does their equity and effectiveness.
The Bialystok Technical University has regularly surveyed 112 major industrial polluters since 1990. The survey includes emissions, abatement rates, pollution charges, abatement costs, types of abatement projects, investment expenditures and their environmental effects. This sample provides basic inputs for analysis of polluters' responses to the government environmental policy after 1989. It is estimated that in 1992 their air and water emissions were responsible for damages on the order of $500 million. At the same time the sample enterprises paid $190 million in air and water pollution fees. The recurrent costs of their abatement activities were $84 million. In addition they spent $108 million on environmentally motivated investment projects. The investment expenditures were financed from the polluters' profits (58%), commercial credits (22%), and soft-loans or subsidies from environmental funds recirculating pollution charges (16%). The contribution of the state budget and foreign assistance combined were negligible (less than 4%).
There is a gap between environmental damages attributable to the sample enterprises and what they spend on environment (a part of which is subsidized). Even though they rank among the highest in the world, the pollution fees in Poland fall well short of their Pigouvian levels. Thus, the most compelling internalization strategy would be to increase pollution fees even further. However, even at their current levels the fees account for 2.7% of production costs. In 1992 in some metallurgical and power plants they accounted for as much as 7%, and in one chemical plant - for 12%. These are very high percentages, and it is unlikely that the government would be willing to increase the fees to their Pigouvian levels in the period of economic transition.
The constraint on the degree of internalization is defined by the pace of economic restructuring and the ability of the economy to absorb the labor freed from enterprises shut-down as a result of their environmental performance. By mid-1993, of the 112 industrial enterprises surveyed, five went bankrupt because of the lack of prospects for environmental compliance; 27 plants were partially shut-down; and 12 are still functioning (despite heavy non-compliance) only because of the local unemployment problem. On the other hand, one should note that 62 enterprises are carrying out comprehensive restructuring/abatement projects. Of these, four firms have already switched to environmentally sound technologies and successfully found their niches in the global market.
Cost estimates to put Poland on a sustainable development path have reached a hard-to-contemplate sum of $260 billion (i.e. more or less triple the current GDP figure) to be spent on all the necessary changes in its economy, including (but not confined to) environmental protection investment. It is difficult to realistically expect that the economy can bear such a burden even in a 30-year perspective. If, however, market forces can be effectively "harnessed", necessary investment expenditures may turn out to be much lower. Such harnessing implies emphasis on financial criteria in decision-making and will certainly not be an easy guide for a country like Poland.
Striking the balance between sectoral and/or regional versus financial (macroeconomic) approaches is, perhaps, the major challenge environmental and industrial policies must meet. On the one hand, discretionary decision-making has to be avoided, in order to facilitate the necessary psychological breakthrough in the attitudes of industrial managers in the former centrally planned economies, who became accustomed to the excessive paternalism of state administration. Since the very beginning of the post-1989 reforms, these managers have been seeking individual or sectoral subsidies, exemptions, tariff protection, etc. To yield to such pressures would lead to the instant decay of the emerging market system in Central and Eastern Europe. On the other hand, the over-reliance on financial measures in the absence of well established market structures and entrepreneurial behavior has led (at least in Poland) to an economic collapse much deeper than initially expected, and, perhaps, deeper than absolutely unavoidable given the dismantling of the economic ghetto of the Soviet bloc.
Is there any way to reconcile the need for sectorally and regionally customized policies with the necessity to stick to firm financial rigors? Integrating market choices into sectoral and regional physical plans can be accomplished through marketable permits applied both at regional and sectoral scales. Successful examples of regional implementation of these instruments are provided by numerous "bubbles" found to be the only practical and cost-effective way to meet ambient standards in many non-attainment areas in the United States. The textbook example of a successful sectoral program is the phasing-out of lead additives in American refineries. Finally, combined sectoral/regional effects were observed in cases where industry-specific pollutants (like e.g. volatile organic compounds released from laundries) were tackled on a municipal basis (Tietenberg 1994).
So far, practical implementation of marketable permits has been almost entirely confined to the United States. Despite their obvious advantages, environmental policy in Europe has largely ignored this option. Very complex legal and administrative tradition in many Western European countries can be identified as the main obstacle to introducing marketable permits there. It is thus both likely and desirable that Central and Eastern Europe will apply these instruments sooner than the rest of the continent [see Howe (1994) for a recent assessment of the potential application of marketable permits vs. Pigouvian taxes].
Given the lack a satisfactory legal framework for transferring pollution permits, early exercises of that sort can be carried out as "experiments" and may be challenged easily. The problem could have been solved by amending the Environmental Protection Act with the following clause: "the terms of a pollution permit can be transferred (either fully or in part) to another plant subject to the approval of the authority who issued the original permit". Indeed such a clause has been envisioned as Article 45 in the Environmental Protection Bill prepared in the MoE in 1991. Unfortunately, because of the dynamics of the political process, the Bill has been pending for more than 3 years now.
Under these circumstances the first Polish experiment with transferable permits in Chorz—w required a complicated and painstaking procedure. Even though its results have proved extremely successful in bringing visible improvements more rapidly and at a lower cost than attainable through traditional instruments (Beblo 1993), its wider replication cannot be contemplated without amending the law.
The need to base post-communist economic policies on firm, system solutions while the new system itself is in statu nascendi, and certain discretionary measures are unavoidable is the major challenge these policies have to confront. A careful balance between the necessary state intervention and a general system development is therefore of paramount importance. There should be identified (and implemented) a number of policy steps to provide a "critical mass" so that environmental and economic reforms get the necessary momentum to proceed. Otherwise, environmental interventionism could be an obstacle to a successful therapy of the economic system. It is possible, however to design a set of instruments which serve the purpose of improving environmental policy and supporting the market logic simultaneously, which is a prerequisite for sustainable development. Economic instruments have a particularly important role to play in this context, and this role has been acknowledged by the Polish MoE since the very beginning of current reforms (Ministry 1990).
Economic instruments include, first of all, fees and marketable permits. These are supplemented by subsidies (distributed in the form of grants, tax allowances, softloans etc.); budget-neutral instruments (e.g. tax differentiation and deposits on harmful products); and finally, noncompliance fines. Economic instruments perform a number of useful functions. Theoretically their most important task is to minimize overall costs of environmental protection through an efficient differentiation of control requirements; namely, those agents with the lowest abatement costs should be given the most stringent requirements. In practice, however, the most typical function performed by economic instruments is to raise funds to be spent on environmental management needs. Only marketable permits - wherever they are applied - have the explicit objective of achieving cost-effectiveness.
Economic theory suggests that the same efficient effect - as in the case of marketable permits - can be achieved by Pigouvian taxes. The alternative in Poland is thus either to raise the existing pollution fees to their Pigouvian levels, or to leave them as basically fund-raising instruments, and introduce marketable permits. It was indicated in previous sections that even now - at their sub-Pigouvian levels - emissions fees in Poland provide a very high percentage of environmental investment expenditure which, in turn, has increased to a relatively high level of 1% of GDP without a potential for further dramatic growth. Raising the fees to the level of marginal abatement costs would imply that - in the short run - virtually all environmental protection costs could be met with the funds collected. In order not to eliminate private environmental expenditure, not all the revenues should be earmarked for environmental projects; they may well substitute for other taxes. While theoretically possible, and perhaps even desirable, such a tax reform clearly would be a major pioneering endeavor, and cannot be a viable environmental policy option in Poland for the next couple of years.
There is yet another option which can combine raising taxes to their efficient levels without implying excessive financial transfers. The option is provided by a set of Pigouvian taxes charged for "incremental" emissions only, where the volume of benchmark (uncharged) emissions can be adjusted to meet any equity criteria (Pezzey 1992). This system, however, must include an initial allocation of benchmarks with "grandfathering" being the easiest way to go. But if the problem of initial allocation is solved satisfactorily, then the road is also paved to apply permit markets, which are more likely to achieve the desired environmental effect (in a least-cost way) than taxes.
The efficiency of this system is questionable. Overall, there are hundreds of rates which vary widely (both across pollutant and polluter types). In principle, the differentiation is based on environmental considerations, e.g. local scarcity of water, toxicity of a pollutant, ecological value of a tree, etc. The whole system, however, is certainly not an efficient one, as the rates were determined rather arbitrarily. A number of equity-motivated coefficients or rebates, discriminating in favor of municipal polluters and water users impair efficiency even further. Whilst it is easy to point out numerous inconsistencies inherent in the Polish fee system, its fine-tuning does not seem to be an urgent task. Rather, one should take a pragmatic approach, and get maximum leverage from the existing mechanism. This applies to the resource and pollution fee system, as well as to all the other tax mechanisms which were described.
Improvements in the following three areas of the current fee system are likely to enhance the efficiency of Poland's environmental policy without compromising its newly acquired apparent short-term effectiveness:
The de-centralization of emission fees would make it possible to experiment with Pigouvian taxes without too much risk of economic disturbances or large-scale environmental failure. However, in order not to eliminate the National Fund, an alternative fund-raising mechanism should be established. Product charges ideally suit this purpose with a modest fuel charge being a sufficient source of income to maintain a reasonable public financing share for programs of supra-regional significance, or programs where this share can be justified on equity grounds.
Both in the current system and in the set-up proposed above, the National Fund takes a prominent role by channelling a substantial portion of public environmental expenditure. Government agencies in the former centrally planned economies are not well-prepared to professionally (i.e. efficiently) administer public funds with which they are entrusted. Neither are individual investors well-trained to professionally appraise and select projects which may best suit their economic objectives. Thus, any public spending agency in Poland has to upgrade its own performance - with respect to project appraisal, selection, monitoring, and assessment - while assisting its potential grantees to carry out their own roles in a professional way.
It should be acknowledged that in the long run Pigouvian taxes may prove to be a practical instrument capable of fulfilling the tasks economic theory predicts. Meanwhile, throughout the 1990's environmental taxes cannot be expected to reliably guide all decision-makers towards optimal, let alone satisfactory, solutions. While a role for direct regulations is inevitable, the hardships and inefficiency of these can be largely alleviated by applying marketable permit concepts within regions and/or industrial sectors.
The system of pollution fees is accompanied by numerous natural resource taxes applied in nature conservation (tree removal fees, forestry surcharges), water resource management, geology, and agriculture. Even though they were often thought of as incentive measures, their most important role is that of raising funds to be spent on protection and conservation. Tree removal fees are an exception to this rule: on the one hand, their level has an incentive effect, and on the other hand they are claimed by general (municipal) budgets. In all the other cases at least a partial earmarking is applied.
Poland's pollution and natural resource tax system is very heterogeneous despite the fact that a single Ministry oversees both environmental protection and most resource use (including mineral extraction) questions since 1990. Although no major resources are free any more, the royalties charged by the state, as the principal owner, are rather low (but rising). With most of the farmland in private hands, soil is an important resource not owned by the state, and its conservation is promoted insufficiently.
The overall system can be improved first of all by making sectoral policy objectives clear and explicit (including water, geology, forestry and agriculture), as well as by designating single entities responsible for the achievement of these objectives within reasonable time frames. An adequate level of centralization for each sector, and an adequate (pragmatically designed) mix of direct versus economic instruments (mainly fees and marketable permits) to achieve policy objectives should be developed. Upon accomplishing this environmental tax rates and rules should be revised accordingly. There is no reason to expect that an "optimal" system of taxes can substitute for a sound policy.
References
Fees are imposed on discharges of waste water and saline water, based on biochemical oxygen demand during the first 5 days (BOD5), chemical oxygen demand (COD), suspended solids, chlorate and sulfate ions, heavy metals and volatile phenols. BOD5 and COD rates are differentiated by economic sector. Fees are also levied on emissions of atmospheric pollutants. Both the waste water and the air pollution fees are the same for all administrative regions. The waste disposal fee distinguishes four categories of waste, depending on toxicity. The fee structure, especially for air pollution, is rather complicated.
Environmental charges in Poland are levied on withdrawals of surface water and groundwater. The rates are differentiated according to economic sectors as well as administrative regions. Furthermore, water users pay user charges to cover investment and maintenance costs of water supply installations as well as sewage collection and treatment. However, these costs are also partially subsidized from the municipal budget in some municipalities. There is also a locally administered fee for tree removal. In addition to these fees, mining extraction fees are applied. They are based on the price of the extracted minerals.
Non-compliance fines are assessed for all pollutants for which regular emission charges are collected, and also for noise. Generally, non-compliance fine rates are much higher than emission charge rates. For instance, non-compliance fines for air pollution are ten times the emission fee. In cases where non-compliance fines are lasting for more than three years, non-compliance fine rates are doubled. However, for water pollutants, a very complicated calculation formula is applied. Non-compliance fines for waste disposal are proportional to the regular fees.
There is an extensive system of tax allowances providing advantages and exemptions for pollution abatement equipment and recycled goods from sales tax and allowing fiscal deductibility of environmental investments by farmers. Traditionally, there has been a deposit refund on some glass bottles, however the system functions poorly due to a limited number of collection and recycling centers.
Emission charges, environmental charges and non-compliance fines have been used in Poland since the 1970s. At first, environmental fees were rather low. Afterwards, the charge rates changed several times. However, the pollution fee system failed to protect the environment under the centrally planned economy in Poland. Its effectiveness was poor because the rates were low and the incentives to reduce pollution and exploitation of resources were extremely weak.
The effectiveness of the pollution fee system in Poland improved after 1990. The fee system has become an important revenue raising mechanism. The emission charges, environmental charges and non-compliance fines are collected and used to capitalize the National Fund for Environmental Protection and Water Resource Management, 49 Voivodship Funds for Environmental Protection and Water Resource Management and the Local (Municipal) Funds for Environmental Protection and Water Resource Management. These revenues are used to co-finance activities to reduce emissions. Almost thirty percent of the funds' revenues came from charges on emissions of sulphur dioxide, nitrogen oxides, and saline coal mining water. These categories of fees are earmarked for abating emissions of the pollutant they were charged for. In contrast, user charges are not collected by environmental funds, but they are collected by the operators of water and\or sewage installations to reimburse their costs.
Poland is in the process of reforming its tax system (also environmental fees). In 1993, new taxes (VAT, excise duty) were introduced to replace ineffective ones that are not in line with the demands of a market economy.
Fees in Poland during the transition period are generally passed on to the consumer through product prices (even if their rates are relatively high) without having any significant impact on the polluter's environmental performance. Inflation erodes the incentive impact of charge rates. The fee system and its function as a revenue raising mechanism in Poland are probably temporary solutions. In the future, this system will be changed to improve the cost effectiveness of applied economic instruments. Most likely, new economic instruments, e.g., product charges and emissions trading, will be introduced.
STATUS
In effect since the 1980s, the rates were adjusted
several times.
AIM
The main purpose is revenue raising.
SUBJECT
All companies which have permits defining the permissible
pollution levels are obliged to pay this charge, proportionally
to the quantity of emissions.
OBJECT
The charge is levied on direct emissions.
LEVEL
1990 first 1.5 ECU/Mg* and next 22.7 ECU/ton 1991 51.4 ECU/ton 1992 64.6 ECU/ton 1993 52.9 ECU/ton
* In accordance with the internationally accepted SI (System International) 1 Mg is 103 kg = 1 tonne. In the following data sheets on instruments, "ton" is used.
INCOME
| collected | ||||
| 1990 | 5.6 million ECU | 99% of imposed | ||
| 1991 | 97.1 million ECU | 86% of imposed | ||
| 1992 | 89.2 million ECU | 86% of imposed | ||
| 1993 | 149.0 million ECU | 167% of imposed | (estimate) |
It was observed that in some cases the annual revenues coming from the environmental charges are higher than the projected revenues. This is a result of the fact that the collected annual revenues also include delinquent charges from previous years.
USE OF INCOME
Collected fees on SO2 air pollution finance activities
to reduce emissions. 36% goes to the NEP+WMF (National Fund),
54% to the VEP+WMF (Regional Funds), and 10% to the LEP+WMF (Local
Funds).
IMPLEMENTATION AND EFFECTIVENESS
Data concerning practical administration, actual
emissions, and enforcement of the fees are lacking. Target groups
and political actors often complain that fees are too high. However,
some managers of industrial enterprises think that the rates of
charges are too low, and accordingly, that the rates do not compel
them to invest in pollution abatement technologies. Effects on
international trade and on income distribution are not yet clearly
determined with respect to the fee levels.
LEGAL BACKGROUND
Environmental Protection Act, January 31, 1980.
Decree of Council of Ministers on the emission fees,
December 27, 1993.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEP+WMF.
Enforcement: MoE, VEP+WMF.
Revenues use: NEP+WMF, VEP+WMF, and LEP+WMF.
PERSPECTIVES
The proposed regulations include provisions for increases
in charges which are proportional to the projected inflation rate
for the following year.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
AIM
Assisting the enforcement of emission standards and
raising revenue.
SUBJECT
The fine is levied if air pollutant emissions are
above respective standards.
OBJECT AND LEVEL
Non-compliance fine is 10 times the regular fee.
1990 first 0.8 ECU/ton and next 10 times the regular fee 1991 10 times the regular fee 1992 10 times the regular fee 1993 10 times the regular fee
INCOME
| collected | ||||
| 1990 | 0.03 million ECU | 99% of imposed | ||
| 1991 | 0.47 million ECU | 17% of imposed | ||
| 1992 | 1.31 million ECU | 32% of imposed | ||
| 1993 | 0.22 million ECU | 17% of imposed | (estimate) |
There has been a significant discrepancy between the assessed and collected amounts of non-compliance fines in Poland, particularly in financially-stressed industrial sectors (extractive and heavy manufacturing) and among municipalities. Low collection rates can be attributed to the limited sanctions that can be imposed for non-payment and the unwillingness (and lack of political support) of the inspectorate to close down financially-stressed enterprises. There are some efforts to collect delinquent fines, but it is often difficult to do so.
USE OF INCOME
Collected non-compliance fines on SO2 air pollution
finance activities to reduce emissions. 36% goes to the NEP+WMF,
54% to the VEP+WMF, and 10% to the LEP+WMF.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual emissions,
and enforcement of the non-compliance fines are lacking. It is
difficult to identify the effect of the fine system separately,
but its effect is greater than in the case of regular fees. This
results from the fact that, generally, the rates of non-compliance
fines are ten times the rates of emission charges. These fines
are payable from after-tax incomes. Target groups and political
actors often complain that fine levels are too high. Effects on
international trade and on income distribution are not yet clearly
determined with respect to the fine levels.
LEGAL BACKGROUND
Environmental Protection Act, January 31, 1980.
Decree of Council of Ministers on the non-compliance
emission fines, December 23, 1987.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEPI (Regional Environmental Protection Inspectorate).
Enforcement: MoE, VEPI.
Revenues use: NEP+WMF, VEP+WMF, and the LEP+WMF.
PERSPECTIVES
In the future it will be necessary to prepare an
amendment to the Environmental Protection Act by preparing a new
form of non-compliance fine.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
STATUS
In effect since the 1980s, the rates were adjusted
several times.
AIM
The main purpose is revenue raising.
SUBJECT
All companies which have permits defining the permissible
pollution levels are obliged to pay this charge, proportionally
to the emission quantity.
OBJECT
The charge is levied on direct emissions.
LEVEL
1990 first 0.4 ECU/ton and next 22.7 ECU/ton 1991 51.4 ECU/ton 1992 64.6 ECU/ton 1993 52.9 ECU/ton
INCOME
| collected | ||||
| 1990 | 0.5 million ECU | 94% of imposed | ||
| 1991 | 25.7 million ECU | 85% of imposed | ||
| 1992 | 26.6 million ECU | 80% of imposed | ||
| 1993 | 28.6 million ECU | 84% of imposed | (estimate) |
USE OF INCOME
Collected fees on NOx air pollution finance activities
to reduce emissions. 90% goes to the NEP+WMF, and 10% to the LEP+WMF.
IMPLEMENTATION AND EFFECTIVENESS
Data concerning practical administration, actual
emissions, and enforcement of the fees are lacking. Target groups
and political actors often complain that fees are too high. However,
some managers of industrial enterprises think that the rates of
charges are too low, and that they do not compel them to invest
in pollution abatement technologies. Effects on international
trade and on income distribution are not yet clearly determined
with respect to the fee levels.
LEGAL BACKGROUND
Environmental Protection Act, January 31, 1980.
Decree of Council of Ministers on the emission fees,
December 27, 1993.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEP+WMF.
Enforcement: MoE, VEP+WMF.
Revenues use: NEP+WMF, and the LEP+WMF.
PERSPECTIVES
The proposed regulations include provisions for increases
in the charges proportional to the projected inflation rate for
the following year.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
AIM
Assisting the enforcement of emission standards and
raising revenue.
SUBJECT
The fine is levied if air pollutant emissions are
above respective standards.
OBJECT AND LEVEL
Non-compliance fine is 10 times the regular fee.
1990 first 0.8 ECU/ton and next 10 times the regular fee 1991 10 times the regular fee 1992 10 times the regular fee 1993 10 times the regular fee
INCOME
| collected | ||||
| 1990 | 0.002 million ECU | 99% of imposed | ||
| 1991 | 0.022 million ECU | 9% of imposed | ||
| 1992 | 0.147 million ECU | 55% of imposed | ||
| 1993 | 0.083 million ECU | 48% of imposed | (estimate) |
There has been a significant discrepancy between the assessed and collected amounts of non-compliance fines in Poland, particularly in financially-stressed industrial sectors (extractive and heavy manufacturing) and among municipalities. Low collection rates can be attributed to the limited sanctions that can be imposed for non-payment and the unwillingness of the inspectorate to close down financially-stressed enterprises (and lack of political support for this). There are some efforts to collect delinquent fines, but it is often difficult to do so.
USE OF INCOME
Collected non-compliance fines on NOx air pollution
finance activities to reduce emissions. 90% goes to the NEP+WMF,
and 10% to the LEP+WMF.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual emissions,
and enforcement of the non-compliance fines are lacking. It is
difficult to identify the effect of the fine system separately,
but its effect is greater than in the case of regular fees. This
results from the fact that, generally, the rates of non-compliance
fines are ten times the rates of emission charges. These fines
are payable from after-tax incomes. Target groups and political
actors often complain that fine levels are too high. Effects on
international trade and on income distribution are not yet clearly
determined with respect to the fine levels.
LEGAL BACKGROUND
Environmental Protection Act, January 31, 1980.
Decree of Council of Ministers on the non-compliance
emission fines, December 23, 1987.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEPI.
Enforcement: MoE, VEPI.
Revenues use: NEP+WMF, and the LEP+WMF.
PERSPECTIVES
In the future it will be necessary to prepare an
amendment to the Environmental Protection Act by preparing a new
form of non-compliance fine.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
STATUS
In effect since the 1970s, the rates were adjusted
several times.
AIM
The main purpose is revenue raising.
SUBJECT
These charges are paid by industrial enterprises
and municipalities which use ground and surface water which is
the state property. These charges are differentiated among economic
sectors and differ per administrative region.
OBJECT
The charge is levied on direct water intake volume.
LEVEL (BASIC LEVELS):
Surface water withdrawals 1990 first 0.4 and next 6.1 ECU/thousand m3 1991 13.6 ECU/thousand m3 1992 18.5 ECU/thousand m3 1993 13.9 ECU/thousand m3 Ground water withdrawals 1990 first 1.2 and next 18.2 ECU/thousand m3 1991 40.8 ECU/thousand m3 1992 55.5 ECU/thousand m3 1993 41.7 ECU/thousand m3
INCOME
| collected | ||||
| 1990 | 2.2 million ECU | 105% of imposed | ||
| 1991 | 30.7 million ECU | 77% of imposed | ||
| 1992 | 44.0 million ECU | 83% of imposed | ||
| 1993 | 33.3 million ECU | 76% of imposed | (estimate) |
USE OF INCOME
36% goes to the NEP+WMF, 54% to the VEP+WMF, and
10% to the LEP+WMF.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual withdrawals,
and enforcement of the fees are lacking. Target groups and political
actors often complain that fee levels are too high. However, the
share of these charges in the production costs of industrial enterprises
is usually not very high. Effects on international trade and on
income distribution are not yet clearly determined with respect
to the fee levels.
LEGAL BACKGROUND
Water Act, October 24, 1974, Environmental Protection
Act, January 31, 1980.
Decree of Council of Ministers on emissions and user
fees, December 27, 1993.
EXECUTING AUTHORITIES
Design of the instr.: MoE; Revenue collection: VEP+WMF.
Enforcement: MoE, VEP+WMF.
Revenues use: NEP+WMF, VEP+WMF, and the LEP+WMF.
PERSPECTIVES
The proposed Water Act includes provisions for the
introduction of charges in water resource management and the allocation
of funds collected from water charges and sewage discharge fees.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
STATUS
In effect since the 1970s, the rates were adjusted
several times.
AIM
The main purpose is revenue raising.
SUBJECT
These fees are paid by industrial enterprises and
municipalities when they pollute the state-owned water resources
and the soil.
OBJECT
The fee is levied on direct discharge amounts.
LEVEL
Biochemical oxygen demand during the first 5 days 1990 first 8.9 ECU/ton and next 133.9 ECU/ton 1991 419.8 ECU/ton 1992 570.3 ECU/ton 1993 428.5 ECU/ton Chemical oxygen demand 1990 first 5.4 ECU/ton and next 80.8 ECU/ton 1991 239.8 ECU/ton 1992 325.8 ECU/ton 1993 244.8 ECU/ton Suspended solids 1990 first 0.8 ECU/ton and next 12.6 ECU/ton 1991 37.4 ECU/ton 1992 51.1 ECU/ton 1993 38.4 ECU/ton Heavy metals (total mass) 1992 5870.6 ECU/ton 1993 4411.1 ECU/ton Chloride and sulfate ions 1990 first 0.4 ECU/ton and next 6.3 ECU/ton 1991 18.9 ECU/ton 1992 32.3 ECU/ton 1993 24.3 ECU/ton
INCOME
| collected | ||||
| 1990 | 5.4 million ECU | 108% of imposed | ||
| 1991 | 85.7 million ECU | 69% of imposed | ||
| 1992 | 83.6 million ECU | 50% of imposed | ||
| 1993 | 59.9 million ECU | 53% of imposed | (estimate) |
Low collection rates can be attributed to the limited sanctions that can be imposed for non-payment and unwillingness of the inspectorate to close down financially-stressed enterprises (and lack of political support to do this as well). There are some efforts to collect delinquent charges, but it is often difficult to do so.
USE OF INCOME
36% goes to the NEP+WMF, 54% to the VEP+WMF, and
10% to the LEP+WMF. These funds do not have to be, but can be
used to reduce waste water discharges. They may also be spent
on other environmental actions.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual discharges,
and enforcement of the fees are lacking. Target groups and political
actors often complain that the fees are too high. However, the
share of these charges in the production costs of industrial enterprises
is usually not very high. Effects on international trade and on
income distribution are not yet clearly determined with respect
to the fee levels.
LEGAL BACKGROUND
Water Act, October 24, 1974, Environmental Protection
Act, January 31, 1980.
Decree of Council of Ministers on the emission and
user fees, December 27, 1993.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEP+WMF.
Enforcement: MoE, VEP+WMF.
Revenues use: NEP+WMF, VEP+WMF, and the LEP+WMF.
PERSPECTIVES
The proposed Water Act includes provisions for the
introduction of charges for water resource management and the
allocation of funds collected from water charges and sewage discharge
fees.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
AIM
Assisting the enforcement of discharge standards
and raising revenue.
SUBJECT
The fine is levied if water pollutant discharges
are above respective standards.
OBJECT AND LEVEL
A very complicated formula is applied. The rates
of the non-compliance fine on waste water depends on the quantity,
state (temperature, pH) and contents of waste water.
Some examples of charges rates:
Heavy metals 1990 0.14 ECU/100g 1991 0.31 ECU/100g 1992 0.42 ECU/100g 1993 0.31 ECU/100g BOD5 and suspended solids 1990 0.08 ECU/kg O2 (BOD5) or ECU/kg (suspended solids) 1991 0.18 ECU/kg O2 or ECU/kg 1992 0.25 ECU/kg O2 or ECU/kg 1993 0.19 ECU/kg O2 or ECU/kg COD 1990 0.05 ECU/kg O2 1991 0.12 ECU/kg O2 1992 0.17 ECU/kg O2 1993 0.13 ECU/kg O2 Chloride and sulfate ions 1990 0.005 ECU/kg Cl and 0.005 ECU/kg SO4 respectively 1991 0.010 ECU/kg Cl and 0.010 ECU/kg SO4 respectively 1992 0.014 ECU/kg Cl and 0.014 ECU/kg SO4 respectively 1993 0.011 ECU/kg Cl and 0.011 ECU/kg SO4 respectively
INCOME
| collected | ||||
| 1990 | 1.00 million ECU | 64% of imposed | ||
| 1991 | 5.51 million ECU | 57% of imposed | ||
| 1992 | 4.98 million ECU | 28% of imposed | ||
| 1993 | 4.64 million ECU | 38% of imposed | (estimate) |
Low collection rates can be attributed to the limited sanctions that can be imposed for non-payment and the unwillingness of the inspectorate to close down financially-stressed enterprises (and the lack of political support for this). There are some efforts to collecting delinquent fines, but it is often difficult to do so.
USE OF INCOME
36% goes to the NEP+WMF, 54% to the VEP+WMF, and
10% to the LEP+WMF. These funds do not have to be, but can be
used to reduce waste water discharges. They may also be spent
on other environmental actions.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual discharges,
and enforcement of the non-compliance fines are lacking. It is
difficult to identify the effect of the fine system separately,
but their effect is greater than in the case of regular fees.
This results from the fact that, generally, the rates of non-compliance
fines are ten times the rates of discharge fees. These fines are
payable from after-tax incomes. Target groups and political actors
often complain that fine levels are too high. Effects on international
trade and on income distribution are not yet clearly determined
with respect to the fine levels.
LEGAL BACKGROUND
Water Act, October 24, 1974, Environmental Protection
Act, January 31, 1980.
Decree of Council of Ministers on the non-compliance emission fines as concerns water pollution, December 21, 1991.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEPI.
Enforcement: MoE, VEPI.
Revenues use: NEP+WMF, VEP+WMF, and the LEP+WMF.
PERSPECTIVES
In the future it will be necessary to prepare an
amendment to the Water Act by preparing a new form of non-compliance
fine.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
STATUS
In effect since the 1970s, the rates have been adjusted
several times.
AIM
The main purpose is revenue raising.
SUBJECT
All coal mining enterprises are charged when coal
mines pollute the state-owned water resources or the soil.
OBJECT
The charge is levied on direct discharge amounts.
LEVEL
Chloride and sulfate ions 1990 first 0.4 ECU/ton and next 6.3 ECU/ton 1991 8.9 ECU/ton 1992 32.3 ECU/ton 1993 24.3 ECU/ton
INCOME
| collected | ||||
| 1990 | 1.6 million ECU | 119% of imposed | ||
| 1991 | 30.6 million ECU | 62% of imposed | ||
| 1992 | 4.2 million ECU | 6% of imposed | ||
| 1993 | 1.6 million ECU | 5% of imposed | (estimate) |
Low collection rates can be attributed to the limited sanctions that can be imposed for non-payment and the unwillingness of the inspectorate to close down financially-stressed enterprises (and the lack of political support for this). There are some efforts to collect delinquent charges, but it is often difficult to do so.
USE OF INCOME
Collected fees on saline (coal mining) water finance
activities solving the problem of salinization. 90% go to the
NEP+WMF, and 10% to the LEP+WMF.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual discharges,
and enforcement of the fees are lacking. Target groups and political
actors often complain that the fee levels are too high. However,
the share of these charges in the production costs of industrial
enterprises is usually not very high. Effects on international
trade and on income distribution are not yet clearly determined
with respect to the fee levels.
LEGAL BACKGROUND
Water Act, October 24, 1974, Environmental Protection
Act, January 31, 1980.
Decree of Council of Ministers on the emission and
user fees, December 27, 1993.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEP+WMF.
Enforcement: MoE, VEP+WMF.
Revenues use: NEP+WMF, and the LEP+WMF.
PERSPECTIVES
The proposed Water Act includes provisions for the
introduction of charges in water resource management and the allocation
of funds collected from water charges and sewage discharge fees.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
AIM
Assisting the enforcement of discharge standards
and raising revenue.
SUBJECT
The fine is levied if water pollutant discharges
are above respective standards.
OBJECT AND LEVEL
The non-compliance fine rate for saline (coal mining)
water (for chloride and sulfate ions in water) is fixed.
Chloride and sulfate ions 1990 0.005 ECU/kg Cl and 0.005 ECU/kg SO4 respectively 1991 0.010 ECU/kg Cl and 0.010 ECU/kg SO4 respectively 1992 0.014 ECU/kg Cl and 0.014 ECU/kg SO4 respectively 1993 0.011 ECU/kg Cl and 0.011 ECU/kg SO4 respectively
INCOME
| collected | ||||
| 1990 | 0.07 million ECU | 100% of imposed | ||
| 1991 | 1.91 million ECU | 122% of imposed | ||
| 1992 | 0.09 million ECU | 12% of imposed | ||
| 1993 | 0.18 million ECU | 15% of imposed | (estimate) |
It was observed that in some cases the annual revenues coming from the environmental fines are higher than the projected revenues. This is a result of the fact that the annual revenues collected also include delinquent fines from previous years. Low collection rates can be attributed to the limited sanctions that can be imposed for non-payment and the unwillingness of the inspectorate to close down financially-stressed enterprises (and the lack of political support for this). There are some efforts to collect delinquent fines, but it is often difficult to do so.
USE OF INCOME
Collected non-compliance fines on saline (coal mining)
water finance activities solving the problem of salinization.
90% go to the NEP+WMF, and 10% to the LEP+WMF.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual discharges,
and enforcement of the non-compliance fines are lacking. It is
difficult to identify the effect of the fine system separately,
but its effect is greater than in the case of regular fees. This
results from the fact that, generally, the rates of non-compliance
fines are ten times the rates of discharge fees. These fines are
payable from after-tax incomes. Target groups and political actors
often complain that the fine levels are too high. Effects on international
trade and on income distribution are not yet clearly determined
with respect to the fine levels.
LEGAL BACKGROUND
Water Act, October 24, 1974, Environmental Protection
Act, January 31, 1980.
Decree of Council of Ministers on the non-compliance
emission fines as concerns water pollution, December 21, 1991.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEPI.
Enforcement: MoE, VEPI.
Revenues use: NEP+WMF, and the LEP+WMF.
PERSPECTIVES
In the future it will be necessary to prepare an
amendment to the Water Act by preparing a new form of non-compliance
fine.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
STATUS
In effect since the 1980s, the rates have been adjusted
several times.
AIM
The main purpose is revenue raising.
SUBJECT
All companies which have permits defining the permissible
pollution levels are obliged to pay this fee.
OBJECT
The charge is levied on direct discharge amount.
LEVEL
1990 first 0.01 - 0.4 ECU/ton and next 0.15 - 6.1 ECU/ton 1991 0.40 - 13.6 ECU/ton 1992 1.20 - 14.7 ECU/ton 1993 0.90 - 11.0 ECU/ton
INCOME
| collected | ||||
| 1990 | 3.1 million ECU | 107% of imposed | ||
| 1991 | 34.5 million ECU | 63% of imposed | ||
| 1992 | 44.7 million ECU | 86% of imposed | ||
| 1993 | 50.4 million ECU | 67% of imposed | (estimate) |
Low collection rates can be attributed to the limited sanctions that can be imposed for non-payment and the unwillingness of the inspectorate to close down financially-stressed enterprises (and the lack of political support for this). There are some efforts to collect delinquent charges, but it is often difficult to do so.
USE OF INCOME
20% goes to the NEP+WMF, 30% to the VEP+WMF, and
50% to the LEP+WMF. These funds do not have to be, but may be
used to reduce waste disposal discharges. They may also be spent
on other environmental actions.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual discharges,
and enforcement of the fees are lacking. Target groups and political
actors often complain that the fees are too high. However, some
managers of industrial enterprises think that the rates of fees
are too low, and that they do not compel them to invest in pollution
abatement technologies. Effects on international trade and on
income distribution are not yet clearly determined with respect
to the fee levels.
LEGAL BACKGROUND
Environmental Protection Act, January 31, 1980.
Decree of Council of Ministers on the emission fees,
December 27, 1993.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEP+WMF.
Enforcement: MoE, VEP+WMF.
Revenues use: NEP+WMF, VEP+WMF, and the LEP+WMF.
PERSPECTIVES
The proposed regulations include the provision for
increases in charges which are proportional to the projected inflation
rate for the following year.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
AIM
Assisting the enforcement of discharge standards
and raising revenue.
SUBJECT
The fine is levied if the terms of the permit for
waste disposal are broken.
OBJECT AND LEVEL
Non-compliance fines for waste disposal are related
to the regular fees. They are assessed as 1/20 of the individual,
annual fee per ton per every day of depositing the waste without
a valid permit.
INCOME
| collected | ||||
| 1990 | 0.16 million ECU | 54% of imposed | ||
| 1991 | 0.08 million ECU | 12% of imposed | ||
| 1992 | 0.27 million ECU | 15% of imposed | ||
| 1993 | 0.07 million ECU | 4% of imposed | (estimate) |
Low collection rates can be attributed to the limited sanctions that can be imposed for non-payment and the unwillingness of the inspectorate to close down financially-stressed enterprises (and the lack of political support for this). There are some efforts to collect delinquent fines, but it is often difficult to do so.
USE OF INCOME
20% goes to the NEP+WMF, 30% to the VEP+WMF, and
50% to the LEP+WMF.
IMPLEMENTATION AND EFFECTIVENESS
Data about practical administration, actual discharges,
and enforcement of the non-compliance fines are lacking. It is
difficult to identify the effect of the fine system separately,
but its effect is greater than in the case of regular fees. This
results from the fact that, generally, the rates of non-compliance
fines are ten times the rates of discharge fees. These fines are
payable from after-tax incomes. Target groups and political actors
often complain that fine levels are too high. Effects on international
trade and on income distribution are not yet clearly determined
with respect to the fine levels.
LEGAL BACKGROUND
Environmental Protection Act, January 31, 1980.
Decree of Council of Ministers on the non-compliance
emission fines, December 23, 1987.
EXECUTING AUTHORITIES
Design of the instr.: MoE.
Revenue collection: VEPI.
Enforcement: MoE, VEPI.
Revenues use: NEP+WMF, VEP+WMF, and the LEP+WMF.
PERSPECTIVES
In the future it will be necessary to prepare an
amendment to the Environmental Protection Act by preparing a new
form of non-compliance fine.
INFORMATION SOURCES
Personal inquiry MoE, NEP+WMF.
STATUS
In effect for several decades.
PRODUCT(S) AND RATE
Originally, only deposits on glass bottles were implemented.
Beginning in 1994, a deposit system for two-liter (soft drink)
plastic bottles has been put into practice. There are different
prices for various types of bottles. Deposit refunds on glass
bottles of beer, wine, and soft drinks are applied in Poland.
In the following table, the exchange rate of 25,153 zloties/ECU
(March 21, 1994) is applied.
| Type | Deposit rate | % of the products' market price |
|---|---|---|
| 0.5 l cream bottles (glass) | 0.06 ECU/bottle | 18% |
| 0.5 l beer bottles (glass) | 0.06 ECU/bottle | 12 - 15% |
| 0.7 l wine bottles (glass) | 0.06 ECU/bottle | 5 - 8% |
| 2.0 l soft drink bottles (plastic) | 0.40 ECU/bottle | 34% |
The research concerning the relationship between the deposit rate and the quantity of bottles returned has probably not been examined.
IMPLEMENTATION AND EFFECTIVENESS
This instrument has a long tradition in Poland, however,
at present, data on the effective return of deposited bottles
are not available.
EXECUTING AUTHORITIES
MoE, Ministry of Industry and Trade.
PERSPECTIVES
It is expected that the list of containers which
require deposits will be extended (for instance others beverages
may be included).
INFORMATION SOURCES
Information on deposits is available from retailers.
AIM
The excise duty differentiation between leaded and
unleaded gasoline is designed to encourage consumers to use unleaded
gasoline. The difference in prices is only 0.018 ECU, limiting
its incentive role.
SUBJECT
The producers and importers of gasoline are charged
the excise duty.
OBJECT
The excise duties are fixed for leaded and unleaded
gasoline.
LEVEL
At exchange rate of 25,153 zloties/ Ecu (March 21, 1994):
Leaded gasoline 0.17 ECU/liter = ca. 42% of the retail price
Unleaded gasoline 0.15 ECU/liter = ca. 38% of the retail price
INCOME
Data on revenue for 1993 are not available.
USE OF INCOME
100% goes to the state treasury.
IMPLEMENTATION AND EFFECTIVENESS
It is difficult to determine the effect of tax differentiation
on gasoline, because this tax has only been applied since 1993.
LEGAL BACKGROUND
Act on VAT and excise duty, January 8, 1993.
Decrees of Minister of Finance on VAT and excise
duty, 1993 and 1994.
EXECUTING AUTHORITIES
Design of the instr.: Ministry of Finance (MoF).
Revenue collection: Customs and Tax Office.
Enforcement: Customs and Tax Office.
Revenues use: the state treasury.
PERSPECTIVES
Changes of the excise duty on gasoline are not planned
for the near future.
INFORMATION SOURCES
Personal inquiry MoF.