taxation, energy taxation, emissions, verotus, tax expenditure
The Ministry of Finance appointed a working group on energy taxation reform for the period 18 November 2019– 1 September 2020. The working group’s task was to conduct preparatory work for implementing the intentions of the Government Programme and to assess the development needs of the energy tax system.
In regard to the intentions set out in the Government Programme, the working group proposes that the increase in heating fuel taxation producing an additional EUR 100 million in tax revenues should take effect at the start of 2021. The increase would concern both the energy content and carbon dioxide components of the taxation, with the rise for peat being equivalent to that for other fossil fuels, and the 0.9 calculation rule for combined heat and power production would be removed. The energy tax expenditures for mining activities would also be removed from the start of 2021. The category II electricity tax for industry, data centers and greenhouse cultivation would be lowered to the EU minimum level and the energy tax rebate for energy-intensive industries would be discontinued. Both measures would be implemented gradually between 2021 and 2024. Regarding a transfer to category II electricity tax in the case of heat pumps and data centres generating heat for district heating networks, a separate examination of this is continuing and will be completed in the early part of 2021.
The working group also proposes the phased removal of tax expenditures on peat and energy tax rebate for agricultural fuels. The working group felt it important that the structure of energy taxation, including tax expenditures, should be regularly reviewed. The group also proposes that there should be regular adjustments to energy tax rates in order to retain environmental incentives and maintain tax revenues.