In the year 1993 , the rate of inflation was 22.9% (the government's goal for this year is to reduce it to 13%); industrial production decreased by 2.8 % in comparison to 1992 (1994 goal is + 6%). Company investments were rather low in 1993 because of the overall economic situation in the country, but this year the situation is expected to improve. Otherwise, the general economic situation is becoming much better, as for example the GDP in 1993 was 1,323 bln SIT (10.0 bln ECU), for this year it is planned at 1,617 bln SIT (10.6 bln ECU). Also the GDP/capita was last year 664,600 SIT (5,023 ECU), for this year is planned at 810,500 SIT (5,330 ECU).
Within the preparation of the National Program of Economic Development of the Republic of Slovenia, development strategies have been designed for some main sectors like energy production and consumption, mining, construction, transport, tourism etc. Because of Slovenia's long term development goal to become an important tourist country in Europe, with its preserved nature and favorable climate, all mentioned development strategies must include the great importance of environmental protection. This year Slovenia starts to realize its important project of building a highway network which will have a very great impact on the whole economy and also on the environment. Besides this, an Environmental Protection Project is in operation, defining and including the main pollution points that must be addressed as soon as possible.
The economic policy supports the environmentally sound development of production indirectly, on one side by reducing duties on modern production equipment, and on the other side by means of a tax deduction scheme stimulating more efficient use of heating systems, etc. However, there are no concrete stipulations among economic and industrial policy regarding the environment.
After 1990 and especially after 1991, when the Republic of Slovenia became an independent state, the economic system has changed and in the field of environmental protection a new Environmental Protection Act was formulated which was passed by the Parliament in June 1993. This Act has superceded many of the previous Acts mentioned above. It emphasizes the care for the environment more strongly and concretely. Through section VIII, "Financing of Environmental Protection", the "polluter pays principle" was put in force.
The Environmental Protection Act provides a good base and sets up the system for introducing all kinds of known economic instruments for environmental protection. Article 80 stipulates:
In Article 81, the possibilities for introducing different kinds of tax reliefs and economic incentives are regulated. It is the task of the Government to elaborate concrete proposals for specific new economic instruments, including the levels and rates, the method of calculation and imposement, the use of the revenue, the criteria for exemptions or rate reductions, etc.
In practice, like in many other countries, ensuring the effective implementation of economic instruments is not a simple task. There are many conflicting interests, which often do not allow the introduction of new instruments. At present, experience warrants a careful rather than hasty approach - as proven by experiences from the past and other countries that it is crucial to first develop a rational and efficient and, above all, a simple system of financing environmental protection.
For the near future, on the basis of the Environmental Protection Act, Slovenia plans the introduction of modern mechanisms for financing environmental protection - primarily economic instruments. Circumstances permitting, it will be possible to start with some economic instruments at the beginning of 1995. The introduction of economic instruments in the areas of air protection and waste disposal is especially under consideration. Because of its possible impact on inflation, however, the introduction of new economic instruments or new levies is a sensitive subject and will be introduced slowly, also in accordance with the general economic situation in Slovenia. Also the introduction of other taxes can complicate the process. For example, a charge on fuels could be introduced, but a charge on fuels for the purpose of raising funds for the building of new highways through the end of this century has just been introduced.
The implementation of the Environmental Protection Act has already met with some difficulties and the same is also true for the introduction of the system of financing environmental protection, which shall include some new economic instruments for environmental protection. The old self-management economic system functioned on collecting money through self-governing communities of on the regional level and so all needs for environmental protection were financed in different ways, unlike economic instruments as they are known today.
The implementation or introduction of economic instruments for environmental protection is becoming rather difficult and this task is unfortunately not considered as urgent at the moment, because there are quite many, more important issues to be arranged first, concerning the establishment of various state institutions and assuring stable economic development for the country.
On the other hand, much was achieved in the field of reducing air-pollution, due to the requirement of buying better quality coals with less content of SO2 from other countries, (which has already produced positive effects) and the beginning of the construction of a de-sulphurization device on the thermal power plant Sostanj.
During the transition to a market economy system, a real state budget was established, where all money collected for environmental protection purposes is channelled to. All state activities in environmental protection are financed from the state budget. The concept for financing environmental protection is now still developing. Based on the new Environmental Protection Act (Article 84) an Environment Protection Fund was established in July 1994. Through this Fund loans will be given for specific types of investments in the field of environmental protection. The connection and importance in practice, between economic instruments (revenue side) and the Environmental Protection Fund will have to be defined and will evolve with the introduction of new instruments.
As far as other funds with environmental relevance are concerned, there are some funds obtained on the basis of the law regulating ownership transformation of enterprises, which are going to be revenue of the Environmental Protection Fund of the Republic of Slovenia. Also, funds obtained by granting concessions concerning State public services in the field of waste handling and disposal shall be income to the Environmental Protection Fund.
A proposal on a system of excise duties similar to systems of some other developed countries, like the Netherlands, Denmark, Finland, Canada etc. is currently being developed. This issue requires much analysis, since the influence of such a system may be very wide and the effects might be contrary to expectations of achieving some other more important economic goals. There are considerations of how to include some excise duties on coal, petrol and certain petroleum products, gas, certain packaging, certain chlorofluorocarbons, etc. Besides the work on excise duties, how to introduce consumption taxes and value added taxes are also under consideration.
The Ministry of Finance, which prepares the new taxation system in Slovenia, leads also the international cooperation in the field of designing, introducing and harmonizing economic instruments.
| Year | Electricity SIT/kWh |
Diesel (D2) SIT/l |
Coal (brown) SIT/t |
Gas (butane) SIT/kg |
|---|---|---|---|---|
| 1989 | 0.20 | 0.61 | 2.35 | 1.70 |
| 1990 | 0.97 | 3.13 | 1.937 | 9.03 |
| 1991 | 2.82 | 10.42 | 2.579 | 21.79 |
| 1992 | 5.00 | 24.54 | 9.473 | 53.13 |
| 1993 | 7.33 | 27.73 | 12.891 | 58.59 |
A strategy on energy production and consumption exists. In addition, a study on new systems of pricing the production and consumption of electric energy is under preparation, which intends to base the level of the price of electric energy on its long run marginal costs. The present level of taxation on energy products is shown in Table 2.
| type of fuel | retail price | % of duty | duty |
|---|---|---|---|
| petrol 95 | 65.10 SIT/l | 50.52% | 32.89 SIT/l |
| petrol 98 | 72.00 SIT/l | 56.94% | 40.99 SIT/l |
| diesel (D2) | 60.30 SIT/l | 53.00 % | 31.96 SIT/l |
| Fuel oil for: - households - industry |
30.90 SIT/l 20.70 SIT/kg |
12.35% 27.00% |
3.82 SIT/l 5.59 SIT/kg |
| Electricity for: - households - industry |
6.69 SIT/kWh 7.50 SIT/kWh |
10% 10% |
0.67 SIT/kWh 0.75 SIT/kWh |
The revenues from these charges and taxes have been used mainly for the needs of water resource management and, among others, for the co-financing of building waste-water treatment plants and also for building municipal water-supply and waste-water systems. This shows that care for environmental protection, especially for clean water, has existed for a long time. After 1991, all above-mentioned taxes were integrated into the general taxation system and all revenues go to the integrated state budget.
Nonetheless, not enough has been done in the field of waste disposal, especially of hazardous waste, and waste dumps as well as air-pollution protection. All activities related to these two fields have mainly been financed by local communities together with financial support of the state government. Therefore, a financial system built by using economic instruments such as those used in water resources management has not been developed. Since 1991, a regulation has been in place, according to which the funds collected with the charge on waste water and the charge on drinking water are to be used especially for environmental protection.
Thus, in accordance with the terms of reference for this project, it is possible to say that in Slovenia at this moment exist two economic instruments for environmental protection. These are:
On local level there are also user charges for sewerage and sewage treatment in place as well as municipal waste user charges.
It is premature to mention some planned economic instruments for environment protection. However, there have been some attempts to introduce certain new economic instruments, like for instance an "ecological tax" on electricity. (Unfortunately, the proposal lasted for only a short time.)
References:
STATUS
In force since 1976.
AIM
The incentive effect is that most of larger polluters
have arranged for their waste water to flow to their own or common
waste water treatment plants. The polluters try to reduce the
charge through investing in environmentally sound production equipment
so that they reduce their pollution.
SUBJECT
The charge is levied on all enterprises, without
exception, that discharge waste water out of the factory (mostly
industrial enterprises and the like).
OBJECT
There is a methodology which includes all pollutants
so that it is possible to assess appropriate charges, which can
be either direct or indirect. The disadvantage of the methodology
is a lack of experimental procedures for determining the level
of the coefficient of pollution (see the legal background).
The most usual case for calculating the value of
the factor "E" is given with the following formula:
E = q / d x k
with E: population equivalent
q: product quantity
d: number of working days per year
k: Pollution coefficientFor the value of "k", a long list of various production sectors or production operation is existing and for each of these a specific value of "k" is specified. For example:
| Type of production | Unit of the product | Value of "k" |
|---|---|---|
| Production of beer | 1 liter | 1.0 |
| Production of cheese | 1 kg | 4.5 |
| Printing on the textile | 1 kg | 3.0 |
| Production of pulp | 1 kg | 5.0 |
LEVEL
The basic charge rate is fixed for one year and is
adjusted to inflation every year. In 1994 it amounted to 383.50
SIT/E (2.40 ECU/E)
INCOME
| 1991 | 290.0 mln SIT | (8.5 mln ECU) | |
| 1992 | 401.1 mln SIT | (3.8 mln ECU) | |
| 1993 | 729.0 mln SIT | (4.9 mln ECU) |
USE OF INCOME
General budget.
IMPLEMENTATION AND EFFECTIVENESS
On the basis of the relevant data which every polluter
sends to the Agency at the beginning of the year for the previous
year, the number of population equivalents (E) is calculated.
By multiplying E with the basic charge rate, the amount of the
charge to be paid is determined. The data submitted by the polluters
is checked for its accuracy from time to time. Administrative
costs are not estimated but surely it is a very rational way for
operating the polluter pays principle. This charge has been valid
for a long time and there has been no problem so far. We can expect
problems arising along with the process of privatization where
new owners will try to reduce different kinds of costs. No change
in effects on international trade and income distribution is expected.
LEGAL BACKGROUND
Official Gazette of the Republic of Slovenia no.
6/94, page 407: Order on Water Charges.
Official Gazette of SR Slovenia no.29/76, page 1625:
Instruction on the method for defining the quantity and degree
of polluted water.
Official Gazette of SR Slovenia no18/85, page 1071:
Technical instruction on defining hazardous materials and on allowed
temperature of discharged water.
RESPONSIBLE BODIES
Design of the instrument: Ministry of Environment
and Regional Planning, Environment Protection and Water Regime
Agency
Revenue collection: Ministry of Finance
Enforcement: Environment Protection and Water Regime
Agency
Revenue use: Integrated budget
PERSPECTIVES
The methodology for determining the factor E (population
equivalent) shall be partly changed in the future, because it
must follow the new production processes. The changes are still
in preparation.
INFORMATION SOURCES
Personal inquiry at Environment Protection &
Water Regime Agency, Ministry of Environment and Regional Planning
AIM
The rational use of drinking water and collection
of funds.
SUBJECT
The charge is levied on all subjects using water
from the public water-supply systems.
OBJECT
The charge is levied on the use of water as a natural
resource and partly for covering the costs of treating drinking
water.
LEVEL
The rate is fixed for one year. It changes with
the rate of inflation. In 1994 it amounted to 4.40 SIT/m3 (0.03
ECU/m3).
INCOME
| 1991 | 20.7 mln SIT | (0.6 mln ECU) | |
| 1992 | 77.3 mln SIT | (0.7 mln ECU) | |
| 1993 | 204.6 mln SIT | (1.5 mln ECU) |
USE OF INCOME
General budget.
IMPLEMENTATION AND EFFECTIVENESS
This charge is a part of the amount of the bill that
every user of drinking water, households and firms, must pay to
the water supplier every month. Actual administrative costs are
not estimated. This charge has been in force for a long time and
there has also been no problem so far. We can expect problems
arising along with the process of privatization where new owners
will try to reduce different kinds of costs. No change in effects
on international trade and income distribution is expected.
LEGAL BACKGROUND
Official Gazette of the Republic of Slovenia no.
6/94, page 407: Order on Water Charges.
RESPONSIBLE BODIES
Design of the instrument: Ministry of Environment
and Regional Planning, Environment Protection and Water Regime
Agency
Revenue collection: Ministry of Finance
Enforcement: Environment Protection and Water Regime
Agency
Revenue use: Integrated budget
PERSPECTIVES
No change is planned in this field.
INFORMATION SOURCES
Personal enquiry at the Environment Protection &
Water Regime Agency, Ministry of Environment and Regional Planning