- Funding Programme
- Year
- 2021
Technical support for an integral reform of the environmental tax legal framework of the Autonomous Region of Andalusia
Spain is a quasi-federal country and Andalusia is one of its 17 Autonomous Communities, accounting for 18% of the Spanish population and 13% of national GDP in 2019. The Autonomous Region of Andalusia has legal competencies regarding management of regional taxes. The aim of the project was to support design of a reform that will boost economic growth and strengthen the resilience of the economy to environmental and climate shocks, as well as contribute to a fairer transition from the actual agricultural production and household consumption models to more sustainable ones.
The Commission helped to investigate four key environmental issues for Andalusia and has produced recommendations in terms of tax policy options to properly address these: 1. Climate change and air pollution from the road transport sector; 2. Circular economy and waste management (including plastic), notably in agriculture; 3. Water pollution and usage; 4. Electricity usage.
Context
Spain's environmental taxes (1.8 %. of GDP) was in 2018 quite below the EU28 average (2.4 % of GDP). The Autonomous Region of Andalusia has legal competencies regarding own management of taxes and has requested technical support to design an environmental tax reform in accordance with the environmental and climate objectives established in the Paris Agreement of 2016 and in the Green Deal.
The aim of this further tax reform is to boost economic growth and strengthen the resilience of the economy to environmental and climate shocks, as well as contributing to a fairer transition. The reform envisages to combine environmental taxation measures with economic growth and job creation, by transforming the polluting sectors into environmentally friendly ones, in line with the EU Green Deal.
Support delivered
The project was mainly implemented with the help of several departments of the Organisation for Economic Co-operation and Development (OECD). A kick-off meeting was organised via videoconference in December 2021 and included various departments of the Andalusian regional government and relevant members of the scientific community (the so-called Scientific Council).
The OECD has undertaken a description of the alignment of the EU, national and regional legal frameworks pertaining to environmentally relevant tax competencies, (finalised in July 2022). Furthermore, they have reviewed the existing tax instruments in Andalusia, assessing their alignment with environmental goals, with a view to identifying strategic reform options, for the four key environmental issues (finalised in autumn 2022). The OECD and DG REFORM have worked for the identification of good practices in addressing the four key environmental issues through environmental taxation. A hybrid TAIEX event on good practices was organised in Sevilla and online by DG REFORM in May 2023, with experts from 5 other EU Member States or regions.
Building on the previous activities, the OECD has drafted strategic recommendations for environmentally related tax reform in the region, focusing on a comprehensive understanding on the legal, economic, environmental and, where appropriate, behavioural bases, in the context of the Region of Andalusia. In December 2022, a training session for the Andalusian technical working group has been organised in Sevilla to discuss the draft recommendations and good practices identified in relevant countries. Finally, a seminar to present the conclusions of the final report to the regional government of Andalusia and other stakeholders was organised in Sevilla in March 2023.
Results achieved
The Regional Ministry of Economy, Finance and European Funds of Andalusia is committed to debate and consult with the different Ministries that play a key role in the design and implementation of environmental tax policies in Andalusia regarding selected recommendations from the OECD report. These include, among other key areas, the management of greenhouse gas emissions and air pollution, as well as the efficient management of water and tourism. In addition, the active participation of all sectors concerned, as well as of the relevant institutional interlocutors, is sought.
Useful links
Official reports: https://www.oecd-ilibrary.org/sites/fe6d8b45-en/index.html?itemId=/content/publication/fe6d8b45-en
More about the project
You can read the final report here: