Applying Fiscal-Budgetary Instruments to Solve Environmental Issues

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Publishing date: Tuesday, 08 December 2020
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  • Q5 – Economia Mediului
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Environmental taxes are one of the main tools used by the Government to promote reasonable behavior  towards the environment. In the Republic of Moldova, the potential of environmental taxes is not fully harnessed and a series of gaps in their structure erodes the capacity to change the behavior of the population and business entities and to solve the environmental issues. At the same time, the public expenditures for environmental protection do not meet the needs in the field. On one hand, they are quite low, so low that we can’t even say that this area is indeed a priority of the Government. On the other hand, very often, the distribution of resources does not comply with the commitments assumed in policy documents or the responsible authorities are not able to meet them. As a result, these gaps reduce the capacity and the efficiency of environmental policies and the results expected by the Government, citizens, businesses, and foreign partners.

This study is part of the research focused on the assessment of economic tools used to promote environmental policies. The study was conducted by a team of consultants from Independent Think-Tank Expert-Grup and the National Environment Centre based on data available for the last years. As per its terms of reference, the study aims to assess the efficiency of fiscal-budgetary tools (environmental taxes and public expenditures intended for the environment) used to implement the environmental policies and to identify the issues that prevent overcoming the challenges in the field. The paper also addresses the environmental taxes and expenditures, including from the perspective of the most urgent issues, and analyze if they can change the situation. Following this analytical exercise, a range of conclusions and recommendations are formulated, which once applied, would increase the chances to achieve the Government’s environmental objectives.

The paper is structured in three chapters, as follows:

Chapter I – assesses globally the fiscal-budgetary tools from a comparative perspective and in terms of the progress in time. The analysis was conducted concerning the practices of European countries and is focused on the following aspects:

(i) Evolution and level of environmental taxes (absolute values and shares in GDP). The environmental taxes were grouped into 4 categories: energy taxes (excises on fuels), transport taxes (transport duties), pollution taxes (payments for environment pollution), and taxes for the use of resources;

(ii) The evolution and the level of public expenditures intended for the environment (absolute values, shares in total public expenditures, and compared to GDP). The expenditures were analyzed from the perspective of budget programs and tools through which public resources are channeled towards environmental protection;

Chapter II – emphasizes the main environmental issues in the country as compared to the situation in various European countries. It focuses on how environmental issues are solved, either by applying taxes or by executing public expenditures. The following environmental issues were taken into account:

  • protection and management of water resources;
  • waste management;
  • extension of afforested areas;
  • air pollution prevention;
  • adaptation and mitigation of climate changes;
  • environment quality monitoring.

Chapter III – assesses the efficiency of the use of fiscal-budgetary tools from the perspective of solving the environmental issues and from the perspective of the use of quantitative tools. This chapter describes in detail the issues related to the application of environmental taxes and the execution of public expenditures.

Descarcă studiul Download the study

Descarcă infograficul Download the infographic

Tags: Natalia Chitii

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