How to integrate emission permits into the environmental related tax statistics: Theory and practice. Test calculations for Norway, 2008-2012

Abstract

This document presents the results from the project “Preparing the Norwegian Environmental Economic Accounts for future reporting requirements – Part A. Sub-Action A.3: Greenhouse gas emission permits – treatment as tax and reporting to Eurostat under the legal base module for taxes by industry and households (Eurostat grant agreement no. 50904.2011.005-2011.300). The objectives have been to clarify the meaning of the decision by ISGWNA (Inter-Secretariat Working Group on National Accounts) saying that part of the greenhouse gas emission permits are to be treated as taxes – and hence will be a part of the reporting to Eurostat under the legal base module for environmental related taxes by industries and households. This document presents the international agreed theory and recent guidelines for this area. The main conclusions from the project are the following:  Only those emission permits sold by the government to domestic enterprises are to be reported as taxes.  The Norwegian government is selling emission permits in an international market. It is therefore not straight forward to identify the emission permits bought by Norwegian enterprises and then to define those emission permits defined as a tax.  The main data sources for estimating the tax revenue from emission permits treated as taxes are the central government budget and accounts, the unit registry and price information from the international stock exchanges. Which source to use when estimating the tax revenue depends on what method is used. The project has covered the following three methods for estimating the tax revenue: 1. Government’s income from their total sale of emission permits 2. Estimated average “tax value” using total surrendered (or issued) permits valued by an average auction price as presented in the MGDD and by the OECD. 3. Enterprises’ costs/payments related to purchases of emission permits.  Problems still remain with regards to which method to implement in the national account  Further work is needed to develop methods for dividing the tax revenue by industries and to find more information on the share of permits bought in the market, to what prices and if possible by whom. The years that have been examined are 2008 to 2012. This is in order to update the module on “environmental related taxes” that are to be completed for the first reporting of environmental related taxes in 2013 as part of the new regulation (EU) No 691/2011 on European environmental economic accounts.