Environmental Taxes

Key Point

Environmental taxes1 are one of the least distortionary taxes, and raised over €5 billion in 2016.

Environmental Tax Revenues

Environmental taxes accounted for 8.1 per cent of all taxes collected in 2016 at just over €5 billion. A total of over €44 billion has been raised over the last ten years. Taxes on pollution as a share of total taxes averaged 8.4 per cent between 2002 and 2016, and have fallen since 2013. See figure 1.

Figure 1 – Environmental Taxes, 2002 – 2016

(Source: CSO, 2017)

Energy taxes – which include taxes on transport fuels – accounted for €3,076m (61%) of all environmental taxes in 2016. Transport taxes – including VRT and motor tax – accounted for €1,908m (38%). Pollution and resources taxes – including plastic bag and landfill levies – accounted for €58m (1.1%). The revenue from transport-related taxes reduced by 39.5 per cent or €993m between 2007 and 2009 due to a large reduction in vehicle sales and the switch to emissions-based taxation. See table 1.

Table 1 – Transport Taxes, 2007 – 2016

(Source: CSO, 2017)




1 An environmental tax is a tax whose base is a physical unit (or a proxy of a physical unit) of something that has a proven, specific negative impact on the environment.

2 Vehicle Registration Tax (VRT)

3 National Car Test (NCT) levy, air travel tax, and vehicle and driving licence expenses.






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