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Dutch government to press ahead with controversial CO2 tax for industry

Suban Abdulla
·2-min read
Firms have voiced concerns over the move aimed at preventing Dutch companies from taking their polluting activities to other European countries to avoid the levy. Photo: Getty
Firms have voiced concerns over the move aimed at preventing Dutch companies from taking their polluting activities to other European countries to avoid the levy. Photo: Getty

The Dutch government has announced it is pressing ahead with plans to introduce a carbon levy on industry, according to Dutch business daily Financeele Dagblad.

It comes after officials suggested the controversial tax would be postponed due to the coronavirus pandemic, saying it didn’t want to “burden” companies who had “other priorities” with an extra tax.

Dutch secretary of state for finance, Hans Vijlbrief, told European finance ministers in Berlin, that he hoped other EU countries would join the Netherlands in implementing similar measures.

The aim is to reduce the emission of harmful greenhouse gases such as CO2 and to encourage companies to operate more sustainably, so that the country can meet the Paris climate targets agreed in 2015.

However, firms have voiced concerns over the move aimed at preventing Dutch companies from taking their polluting activities to other European countries to avoid the levy.

Tata Steel (TATASTEEL.NS), Yara (YARIY) and Dow chemicals (DOW) said the tax would damage their competitiveness, as the extra tax will be paid on top of the price they already pay per tonne of CO2 emitted under the European Emission Trading System.

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The tax — which could be introduced as early as next year — would affect the 300 most polluting companies.

Under the plans, firms will be given some exemption for a certain amount of CO2 emission, but they will have to pay for everything they emit on top of that amount.

However, the government will use a phased out approach between 2021 and 2030 — giving companies fewer and fewer exemptions — to allow them to get used to the measures in the first few years, so that together they can reduce emission by 14.3 megatonnes by 2030.

Vijlbrief also told EU ministers that the country is still planning to implement a €7 (£6.48, $8.29) tax levy on all airline tickets in 2021, the paper said. The move has already gained support from other EU countries including, Germany, France, Denmark, Belgium, Sweden, Italy, Luxembourg and Bulgaria. Despite the support, Brussels does not deal with taxation as its a national responsibility.

Previously, the tax on flying was due to commence on 1 January 2021, but Vijlbrief said he would reconsider the date, in light of the COVID-19 crisis, after lockdown measures and grounded flights hammered global aviation industries.

“When is a good time? This is a way of transport that is currently not taxed at all,” considering the difficult period the aviation industry is going through, Vijlbrief said of the airline ticket tax.

The proposed industry tax measures will be included in the government’s 2021 budget, which will be presented to MPs on Tuesday (15 September).

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