Implicit tax rate for energy

The implicit tax rate for energy in the Netherlands has increased almost continuously since the year 2000. The ratio went from 2.20 euros per GJ in 2000 to 3.70 euros per GJ in 2016. Energy use is thus increasingly taxed.

Implicit tax rate for energy (euros/GJ)
 Implicit tax rate for energy
20002.2
20012.3
20022.3
20032.3
20042.5
20052.7
20063
20072.8
20083.1
20093.2
20103.2
20113.4
20123.3
20133.6
20143.7
20153.7
20163.7

The implicit tax rate for energy is calculated by dividing the energy-related taxes (excise duties on petrol and other motor fuels and tax on electricity and gas use) by net domestic energy use.

The issue

Many countries have set up energy taxes as an economic instrument aimed at implementing environmental liability and achieving the international targets for reducing global greenhouse gas emissions. The implicit tax rate for energy gauges the development of the average tax burden on energy use. A shift in taxation from labour to energy consumption will foster energy efficiency.

Analysis

The increase in the implicit tax rate for energy is caused by higher excise duty rates on motor fuels and the tax on electricity and gas use, which is levied on the use of electricity and natural gas. The implicit tax rate is relatively higher for the service industries than for manufacturing, as energy tax rates for bulk users are usually much lower than for small-scale users. The implicit tax rate for energy rose until 2006. In 2013, energy related taxes grew by well over 8 percent, whereas energy use remained fairly stable. As a result, the implicit tax rate for energy rose to an all-time high. However, in the last three years the implicit tax rate has remained rather constant.

International comparison

To enable international comparison, Eurostat, the statistical office of the European community, defines implicit tax rate as the ratio between energy tax revenues and final energy consumption. They measure energy tax revenues for one calendar year in euros and final energy consumption in tonnes of oil equivalent.

Implicit tax rate on energy, 2016 (euros per toe)
 Implicit tax rate for energy, 2016
Denmark401.5
Italy384
Greece334.3
United Kingdom279.4
France266.4
Netherlands257.9
Slovenia256.7
Norway252.6
Ireland242.4
Sweden227.5
Portugal206
Spain205.3
Germany203.2
Luxembourg188.9
Estonia171.5
Austria168.7
Finland159.4
Poland152
Belgium151.7
Czech Republic138.4
Hungary124.8
Iceland39.1
Source: Eurostat

In the Netherlands, energy use is taxed more than in other European countries. With 258 euros per tonne of oil equivalent, the Netherlands held sixth position among twenty-two European countries in 2016, just below France (266 euros per tonne), the United Kingdom (279 euros per tonne) and Greece (334 euros per tonne). Denmark (402 euros) and Italy (382 euros per tonne) have the highest tax burden on energy use. Finland, Poland and Belgium belong to the countries where energy is the least taxed. Over the past two decades, the Netherlands climbed from a fourteenth place (out of 19 countries) in 1995 to a ninth in 2000 (20 countries) and then a seventh in 2005 (20 countries) and a fifth place in 2010 and 2013 (21 countries reporting in both years). In 2016, the Netherlands dropped one place.