Eurostat has recently published figures on environmental taxes in the EU, revealing that Luxembourg actually comes bottom in terms of the share of environmental taxes of total government revenue.

Using a dataset ranging from 2002 to 2018, Eurostat examined environmental taxes within the European Union.

General trends

The nominal total of EU environmental tax revenue in 2018 came to a total of 324.6 billion, which represents a 49% increase from 2002. Relative to the EU GDP, however, the value of environmental taxes has dropped from 2.5% to 2.4% over the course of those 16 years. Eurostat also noted that the share of environmental taxes in terms of total revenue from taxes and social contributions dropped from 6.6% in 2002 to 6%.

The statistics service also noted two patterns during that period, namely five years of consecutive decrease up until 2009, at which point environmental tax revenue stabilised after 2009, and then slight decreases as of 2016.

© Eurostat

In terms of breaking down environmental taxes, Eurostat developed three categories: taxes on energy, transport taxes, and pollution and resource taxes, the latter of which groups together taxes levied on waste or water pollution. The last category remains the smallest portion (3.3%), in part due to such taxes having been introduced at a later date in many countries.

Broadly, taxes on energy accounted for over half of environmental tax revenue in all EU member states, with Czech Republic, Romania, and Luxembourg standing out for energy tax corresponding than more than 90% of total environmental tax revenue.

Luxembourg stands out

© Eurostat

Whilst Latvia, Bulgaria, Greece, Slovenia, and Croatia all recorded the highest shares of environmental tax in taxes and social contributions, the Grand Duchy came in last at 4.4%. In 2009, Luxembourg's environmental tax share was slightly higher at 6.56%, having since dropped two percentage points in 2018. However, given that the Luxembourgish government has increased fuel excise duty in 2019 and 2020, there will be an increase in Luxembourg's share of environmental taxes.

Eurostat also noted that Luxembourg stands out for having the largest share of environmental taxes taken from non-residents (60%), largely due to diesel and fuel sales in the Grand Duchy's continuing fuel tourism reputation.

How Luxembourg will fare in future datasets will be interesting to observe given the government's ambitious goals in their climate and energy action plan, although critics continue to highlight the vague nature of the plan and lack of details in specific measures.