Cut income tax and raise environmental taxes to develop resource efficient economy says EEA

The European Environment Agency (EEA) has suggested that European governments should consider cutting labour taxes such as income tax to raise taxes on inefficient resource use and environmental pollution.

In a new report, Resource Efficient Green Economy and EU Policies, EEA suggests that environmental taxes could encourage job creation but are under-used in the EU, and are equivalent to only 2.4 per cent of GDP in 2012.

It argues that countries with the highest environmental taxes also seem to rank very highly for eco-innovations and competitiveness.

The report considers how European economies can drive more efficient material resource use as part of the transition towards a ‘green economy’.

While many environmental trends are gradually improving, the report says the EU needs a more fundamental, systemic re-orientation of its economy if it is to meet some of its long-term environmental objectives.

EEA executive director Hans Bruyninckx said: “Environmental innovation is key to address the challenges of the 21st Century. If we want to ‘live well within the ecological limits of the planet’ as stated in the 7th Environmental Action Programme, we will need to rely heavily on Europe’s inventiveness.

“This is not just about new inventions – encouraging the uptake and diffusion of new green technologies may be even more important.”

Although the EU aims to increase the share of manufacturing to 20 per cent of GDP by 2020 from 15.1 per cent in 2013 and that this could benefit innovation in areas such as renewable energy, the report warns that manufacturing growth could have negative consequences on greenhouse emissions and use of resources unless it is consistent with environmental objectives.

It also warns that any hopes of more resource efficiency within Europe as a result of the financial and economic crisis in 2008, appear not to have happened with Europe now on a similar trajectory to how it was before.

View the report at