The Organisation for Economic Cooperation and Development (OECD) has urged Spain to introduce higher green taxes to fund measures to boost economic growth.
“Spain has visibly improved its environmental performance since the turn of the century,” OECD Secretary-General Angel Gurría said. “Spain must now ensure that its economic recovery does not undo that work. There is scope to both strengthen and simplify environmental policies to achieve growth that is robust, inclusive, and green.”
According to the OECD’s new Environmental Performance Review of Spain, the country has not fully used the potential of environmental taxation to achieve environmental objectives and to help reduce public debt.
The report welcomed a proposal to increase the taxation of diesel as a way to tackle pollution in the transport sector. It said that taxes on other fuel use, such as for heating, should also be examined.
In addition, taxation of energy products should be revised to ensure that the tax burden on natural gas and coal reflects their respective contributions to carbon dioxide and air pollutant emissions, the OECD said.
The report also urged Spain to rein in exemptions and deductions relating to transport fuel taxes.
The OECD said that energy tax reform could raise the Spanish Government’s revenues by between EUR7.2bn (USD7.94bn) and EUR9bn in 2018, while having a lesser impact on growth rates than other revenue-raising measures.
Spain’s green tax revenue has fallen to among the lowest in Europe, at 1.6 percent of GDP in 2012, the report said.
The country is considering a number of reforms to its environmental taxes, including a reform of vehicle taxes and the introduction of a nationwide waste tax.
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