Ecological Tax Reform
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  • Topic: Green economy in the context of sustainable development and poverty eradication
  • Location: Germany
  • Date of completion: 1999
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  • This voluntary initiative came from Green economy policies, practices and initiatives

Description/achievement of initiative

Between 1999 and 2003 the ecological tax reform raised taxes for engine fuels, electricity, light fuel oil and gas in small foreseeable stages.
Source: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, Germany


The principle of the ecological tax reform has been to reduce the environmentally damaging consumption of fossil energy, the tax reform has raised taxes for these energy sources. This has created incentives for energy conservation, innovative energy-efficient technologies and the use of renewable energies. In this way, emissions of greenhouse gases and air pollutants have been reduced and oil dependence eased. The revenue incurred has been used for a direct reduction of non-wage labour costs.


The revenue incurred is mainly used for a direct reduction of non-wage labour costs by lowering employers' and employees' contributions to the pensions fund. A smaller part is used as support for renewable energies and for the rehabilitation of buildings for energy saving purposes; tax reductions and exemptions are used to support energy-efficient power plants and public transport amongst other things. This helps to support and strengthen climate protection on the one hand; on the other hand, labour becomes cheaper and more attractive.





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