In the 1970s and 1980s increasing environmental awareness led to the introduction of the first real environmental taxes on waste, retail packaging, disposable tableware, pesticides and CFC’s. Also the first differentiations of the petrol tax according to the lead content were implemented. At the same time the energy crises led to the use of energy taxes as one of several ways reduce Danish dependence on imported fossil fuels. Taxes on electricity,mineral oils, gas and coal was introduced in the late 1970s and early 1980s.

In 1995 the Danish parliament adopted a major change and increase in the taxation of business CO2 emissions and energy consumption. The reform included a gradual increase in the CO2 tax (which was introduced in 1992) and energy taxation, the introduction of a new tax on sulphur emissions as well as the broadening of the base of the energy taxes.

Danish SO2 tax applies similarly to household and industry. These goals help to promote:

1. The tax will incur on the price of energy where the production is based on the use of fuels that contain sulphur, and as a result, energy consumption would decline
2. The tax will change the energy price structure, thereby providing and incentive to substitute high sulphur content fuels with fuels with a lower sulphur content, as they became relatively cheaper
3. The tax will provide an economic incentive for the development of new low sulfur content fuels
4. The tax will promote improvement of the existing end-of-pipe cleaning equipment

Currently the charge is based on electricity output, but plans in future to charge based on the sulphur inputs thus increasing the incentive of power plants to use low-sulphur fuels. Institutional Arrangements

TAXING WAYS AND TAX RATE

The tax can be levied in two different ways:

1. A product tax. This tax is levied on the sulphur content of the applied fuels; and

2. An emission tax. This is a tax that is charges according to the actual emissions of sulphur dioxide. The tax is not imposed on sulphur that is either cleaned, detained in the ash, or detained in other products.

Tax Rates:

The tax is a uniform rate of DKK 20 per kilo of SO₂. The tax rate has gradually increased between 1996 and 1999, and was due to reach full effect in 2000 (DEPA 1999, pp95).

Product tax: DKK 20/kg sulphur

Emission tax: DKK 10/kg sulphur

Latest figures from Sterner (2003) note a tax of US$1,300 per ton of sulphur emissions.

 

The tax is recycled to industry until the year 2000. During that period, taxes are only imposed on sulphur contents above specific lower limit values. For very energy intensive coal-based enterprises, there is a scheme for further deductions in general terms. This implies that the enterprises are entitled to deductions for all sulphur contents below 0.2 (the 1996 limit value). Hence, these enterprises are liable to a tax which continues to apply for sulphur content above 0.2, whereas other enterprises are liable to taxes that apply to steadily lower sulphur content. Enterprises are only entitled to deductions providing they comply with certain conditions.

REVENUE-NEUTRAL OR NOT?PERSONAL OPINION

There is no references talking directly about Danish Sulphur Tax’s revenue-nuetralness. But I personally think Danish Sulphur tax can count as revenue-neutral because the revenue was cost neutral for the industrial sector as a whole, since the additional tax revenues were returned to the industry.

It has been considered very successful in the both environmental and economic aspects:

1.  Sulphur Content in Fuels. The sulphur content of both fuel gas oil and heavy fuel oil has fallen from 0.2% to 0.05%, and the sulphur content of coal has been reduced by a third
2. Technology in Industry Plants. The tax has had a positive impact on the development of sulphur purification plants and technology,’There has been a 33% reduction of SO₂ emissions in 1996 in the other “sectors” by a changeover to low sulphur content fuels reports a 76% reduction in sulphur emissions in Denmark between 1980 and 1997
3. Economic View. Danish sulphur tax has an increasing revenue every year and the  tax revenues were returned to the industry as a whole.

 

2.Economic Instruments – Charges and taxes. Sulpher Tax (Denmark)http://www.economicinstruments.com/index.php/air-quality/article/63-

3.Energy Efficiency Policies and Measures in Denmark. http://www.ens.dk/da-DK/Info/TalOgKort/Statistik_og_noegletal/Indikatorer_for_energieffektivitet/Documents/Structure%20National%20Report%20ODYSSEE%202012.pdf