EFR (Environmental Fiscal Reform)

We define Environmental Fiscal Reform (EFR) as a tax shift from labour towards environmental use, supplemented by the reform or removal of environmentally adverse subsidies.

Environmental taxes foster more rational use of natural resources and can reduce pollution. They are also a good incentive for technological innovation and can contribute to a cut in taxes in other areas, such as labour.

Suppressing environmentally harmful subsidies is an efficient measure for both the environment and the economy.

The benefits of fiscal reform were recognised in the Europe 2020 Strategy from March 2010, encouraging Member States to shift away from high labour taxation and towards the taxation of environmental pollution and energy use.

Such a tax shift could contribute to fiscal consolidation, innovation, a greening of the economy, enhanced competitiveness and quality job creation. It would also contribute to meeting our resource efficiency, climate and energy saving objectives.