A NEW DEVELOPMENT
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:
- - The idea of sustainable development needs to be transformed into a more
tangible and measurable concept. The development of environmental pressure
indicators and indices, green satellite accounts to national accounts and in the
long run integrated environmental/economic national accounts need to be
- - Economic policy makers should ensure that the integration of
environmental policies in other policy areas, where appropriate, relies as much
as possible on the market mechanism, as this often enables solutions that are
least cost to the economy to be found.
- - The objective of �integration� suggests that a review of the environmental
implications of existing tax and incentive schemes is needed. Incentives to
environmentally unsustainable activities should be suppressed where
- - The introduction of environmental taxation is likely to constitute an
important element of the new �integration� approach.
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