The Green Tax Package

The objectives were twofold: On one hand taxes had to be high enough to have an effect on reduction of the CO2-emissions; on the other it was essential that the tax burden did not affect the competitiveness of the companies.

A balance of the two conflicting objectives was reached by:

• Redirecting the additional tax revenue from the green tax to trade and industry
• Increasing the tax rates gradually, thus giving companies time to improve energy efficiency, switch to fuels with lower emissions, et cetera
• Applying differential tax rates depending on the use of energy, thus lowering rates for energy intensive production methods

  The Green Tax Package for trade and industry comprises three different taxes: A CO₂ tax, a SO₂ tax and an energy tax.

An evaluation in 1999 showed that the Green Tax Package has contributed significantly to the attainment of the expected targets for CO₂ emissions. It also concluded that the additional taxes on trade and industry had no noticeable consequences for the economy or competitiveness of the companies as a whole. This is mainly due to the redirection of revenue to trade and industry and tax rebates for energy-intensive enterprises.

Read more about the Green tax Package in the pamphlet Green Taxes in Trade and Industry – Danish Experiences (pdf - 12 pages)
Read the report: Green Taxes for Trade and Industry - description and evaluation (pdf - 44 pages)