The green taxation at local level to tackle the sustainable tourism challenges

An article signed by Mr. Francesco Filippi (MUSOL foundation, Spain) as testing activities coordinator of LOCAL4GREEN project

The sectors of the economy that fall outside the scope of the European Union Emissions Trading System (EU ETS) account for almost 60% of the European Union (EU)'s total domestic emissions of greenhouse gases (GHG)1. In some EU Mediterranean countries, the non-ETS sectors account for even higher rates of the total GHG emissions, such as in Spain where the non-ETS sectors reach 62% of the country’s GHG emissions2 or in Italy where the non-ETS sectors reach 63% of the country’s GHG emissions. It is clear that a drastic decrease of the GHG emissions of the non-ETS sectors is crucial for the EU's implementation of the Paris Agreement.

The EU has put in place an ambitious policy (the “Effort sharing” legislations) to tackle the non-ETS sectors emissions, setting an overall 10% emissions reduction by 2020 and a 30% emissions reduction by 2030. It is worth to remark that such commitments - along with the EU ETS and the land use, emission and removals from land use change and forestry (LULUCF) regulation - are critical to achieve the EU overall goals in terms of climate change mitigation undertaken in the framework of the Paris agreement.

The non-ETS sectors include transport, buildings, agriculture, non-ETS industry such as the tertiary sector, and waste. Such sectors all share a common feature: the local and regional authorities regulate them and they can greatly influence the non-ETS sectors impact in terms of GHGs emissions. Furthermore, such sectors are strictly related with the development of the tourism. The way local authorities shape and regulate such sectors has a direct impact on the sustainable tourism development.

The local authorities adopt different tools of regulation such as the mandatory and control regulations; the economic and market based tools; and non mandatory and volunteer instruments. Among the economic and market based tools, the fiscal policies stand out for their multiple repercussions: the fiscal policies have an impact in terms of fiscal collection, they can take into account the external environmental effects of economic activities as well as they are a lever to influence behaviors of taxpayers. The fiscal incentives are quite more sustainable than direct subsidies and the fiscal disincentives fix the “right prices” for polluting products and services, ideally aiming at prices that reflect the environmental impacts of products.

Even if in the 2002-2014 period the actual number of environmental taxes implemented in EU Member States has increased, the green taxation at local level is still largely unexplored, since most of the environmental taxes are deployed by national governments. Despite the local authorities in the Mediterranean area are largely limited or forbidden from putting in place new environmental taxes, in many cases they can easily modify the existing local taxes and fees taking into account the environmental interests.

The LOCAL4GREEN project, funded by the ERDF and the IPA in the framework of the Interreg MED 2014-20 programme, has supported more than 70 local authorities from 9 Mediterranean countries to design fiscal policies to promote renewable energy sources. In many cases, taxes and fees have been reduced for the taxpayers using renewable energy sources. The main taxes that have been modified levy on the real estate, tertiary and non-ETS industries, as well as private transport. Therefore, such tax incentives will drive small businesses or homeowners to renewable energy sources with an impact in terms of GHG emissions reduction in most of the non-ETS sectors.  

The experience has a huge potential of replication. Not only the renewable energy sources can be promoted throughout the local fiscal policies. The local taxes and fees can be shaped taking into account other environmental interests, related to sustainable tourism.

Actually, a policy paper produced by the LOCAL4GREEN recommends the competent authorities (national or regional in some cases) grant local authorities the power to establish a municipal tourist tax on stays at hotel establishments in the municipality. This tax or, where appropriate, surcharge, should be proportionally set at an amount that takes into consideration the use or non-use of energy from renewable sources by the hotel or the sustainables tourism or energy management labels of the hotel.

The corresponding tax yield should be allocated, at least in part, to setting up subsidies so that establishments in the municipality can incorporate energy from renewable resources in their functioning. Actually, the LOCAL4GREEN Project has promoted in Cyprus two experiences related with tourist tax. In Nicosia, the Hotel Accommodation Tax has been sligthly increased (+20%, ex. 0,85 € per night to 1,02 € per night for a 5S hotel) and the additional tax yeld (estimation 24,000.00 €) will be allocated in a “Green mechanism” to provide free energy audits and consultancy services to hotels and professionals to identify opportunities for energy reductions and RES.

Definitively, one of the main virtues of the LOCAL4GREEN project is the focus on an unexplored niche of public policies that can be exploited also to promote the sustainable tourism.

1 Source: