A NEW DEVELOPMENT APPROACH

Following the 1993 White Paper on Growth, Competitiveness and Employment, the European Commission has carried out extensive work on integrating environmental consideration in policy making in all sectors of the economy. Some of its main findings:

An adaption of existing tax and social security schemes is desirable for economic and employment reasons (e.g. in view of the contribution these systems might make to inflexibilities on goods and labour markets). On the other hand, the new �environmental integration� strategy, will in a number of cases probably entail the introduction of taxes correcting for environmental externalities, which could raise significant revenues. This coincidence should be exploited with a view to realising synergies. For example, if indirect labour costs are especially harmful to employment at the bottom end of the labour market, it could be considered to reduce labour taxation in this segment. Financing might come partly from environmental taxes that have to be introduced anyway for reasons of sustainable growth. It seems that, under certain circumstances, both environmental and economic bebefits can be realised.

European Commission, 1994