Background

The Netherlands has the highest environmental taxes in the world. Citizens and companies in the Netherlands pay 27 billion euros annually, together with charges on polluting behavior. Water has always played an important part in Dutch life. The Netherlands(41,000 km2, including 3,000 km2 of fresh water and 4,000 km2 of saltwater) is a low-lying country in the delta of four European rivers: the Rhine,the Meuse, the Scheldt and the Ems. Since 1960, the quality of surface water in Netherlands deteriorated rapidly, which lead to government’s great concern. In the late 1960s the water boards were reorganized and they were provided with the responsibility of collecting levies for discharges. The rejection to proposal for large-scale state subsidies to the Water Boards for the construction of local sewage treatment plans results in “a full-recovery scheme based on revenues from emission charges  (in accordance with the polluter-pay principle)” (UCD). In 1970, the Dutch wastewater levy was set up with the 1970 Surface Waters Pollution Act and came into effect in 1971. Therefore the original aim for the state water levy is to curb water pollutions by using revenue to support municipal sewage treatment plan as well as in-house pollution abatement in industry.  Since 1996, the subsidy scheme for industry was abolished.

Coverage and Tax Rates

The levy is imposed on all direct and indirect surface water to surface waters. The tax rate varies for different polluters. Households pay a flat rate, small firms pay a fixed rate, medium sized firms and large firms can pay according to direct measurements. Here the medium sized firms also can pay by non-measured factors. I think if the households pay a flat rate, will this cause the distribution problem? Because the poor people maybe get worse off.  But until now I cannot find evidence on it.

The waste tax taxes the amount of waste that is delivered at a waste-processing firm or dumping ground (this tax is levied on the weight of the waste). The waste water tax applies to the discharges of organic material, mercury, cadmium, copper, zinc, lead nickel, chromium and arsenic. Here taking the year of 2008 to 2009 as an example to show main emissions to water.

http://www.wavespartnership.org/waves/sites/waves/files/images/Netherlands%20env%20accts%202010.pdf

The tax rates have increased many times since it was introduced. According to UCD, “from 1972 to 1990, the levy rate tripled and from 1990 to the end of the 1990’s the levy rate doubled once again”. The tax rate varies ate state level and at Water Boards level (regional level), it is 25 Euro per pollution unit for state waters levy and 37 Euro per pollution (on average) for Water Board levy. State waters are defined as the main rivers as well as the North Sea and are admonished by the water management department of the Ministry for Transport and Public Works.  There are 27 regional Water Boards in Netherlands and they are responsible for regional waters and to their sewage treatment plants. These Water Boards are powered by provinces, but their levy is not bond to the law. I think this maybe a issue for Netherlands water pollution control policy.

 Revenue

The revenue from the state waters levy is used to support both municipal sewage treatment plants and industrial in-house pollution abatement. Revenue recycling was particularly important during the early years of the scheme, when several of the most polluting industries were assisted in implementing emission reduction measures (RIZA, 1995).

When the levies were first introduced, several thousand consumers took part in an organized boycott campaign against their payment, as the levies were seen as unjust and the Water Boards as illegitimate. Consumers didn’t recognized themselves as polluters. However, the cost to the Dutch household is relative lower because there was less need for investment in public sewage treatment capacity. And also, the results seemed very positive. Andersen (1994) the levy system encouraged technology innovation which were promoted by subsidies from the levy, so this tax policy worked comparatively more efficient than similar programs in neighbouring coutries. In the meantime, the cost of this policy cannot be ignored. According to published data, in 1995, water pollution control costs made up about 25 percent of total environmental costs and ranked as send largest after waste management. Because I cannot get more recent data on this topic, I am concerned about the update information may tell a different story from what I did research on Netherlands waste water tax. And also Data on the annually discharged amount of damage units as defined by the waste water tax law are not available.

Reference: 

http://www.dutchdailynews.com/environmental-taxes/

RIZA, 1995. Waste-Water Charge Schemes in the European Union. A report for the European commission, Office for Publication of the European Communities.

Environmental Taxes: Implementation and Environmental Effectiveness (Environmental issues Series No.1), European Environment Agency, Copenhagen 1996, pp59-60

http://ec.europa.eu/environment/enveco/taxation/pdf/ch7_waste_water.pdf