Environmental tax incentives: Dutch government expenditure 1996-2000
There are various tax incentives for investments in capital assets that reduce environmental pressure. The main existing tax incentives are VAMIL, MIA, EIA, the REB exemption and Groen beleggen.
'Accelerated Depreciation of Environmental Investments' (VAMIL)
The total amount of investments which qualify for the VAMIL scheme was almost EUR 1.5 billion in 2001 (left-hand graph). Government tax expenditure associated with this scheme has increased from approximately EUR 10 million in 1992 to more than EUR 100 million in 2001 (right-hand graph).
The VAMIL scheme has been in place since 1991. These two schemes allow entrepreneurs who are liable for tax to reduce their taxable income if they invest in environmentally-friendly capital assets. The government uses the VAMIL scheme to encourage the introduction to the market of technologies that are not yet widespread and that contribute to a reduction of environmental pressure.
VAMIL applies to investments across practically the whole environmental spectrum: from water to soil, air, energy, waste and noise. Capital assets that qualify for the scheme are placed on a list that is updated annually.
Environmental investment incentive (MIA)
Government expenditure under the conditions of the MIA scheme, that was introduced in mid-2000, increased from EUR 30 million in 2000 to a budgetted amount of EUR 39 million in 2001. The total amount of investment covered by the scheme was approximately EUR 635 million in 2001.
The MIA came into effect in July 2000. As with the VAMIL, entrepreneurs liable to tax can use the MIA to reduce their taxable income if they make investments in environmentally-friendly capital assets. The MIA is used to encourage environmental investments in the broad sense. Capital assets that qualify for this scheme are placed on a list that is updated annually.
Energy Investment Incentive (EIA)
In 2001, the total amount of investments covered by the EIA scheme was approximately EUR 1 billion. The tax benefit for entrepreneurs on the basis of this scheme has increased from EUR 61 million in 1997 to EUR 160 million in 2001.
The EIA scheme has been in place since 1997. With its introduction, the government wishes to encourage the Dutch private sector to invest in energy savings and the use of sustainable energy. Under the scheme, some of the costs associated with these investments can be deducted from the fiscal profit. Capital assets that qualify for the scheme are placed on a list that is updated annually in the light of new developments in the fields of technology, standards, labelling and certification.
Exemption from regulatory energy tax (REB)
In order to encourage the production and use of sustainable energy, there are a number of schemes associated with the regulatory energy tax. On the basis of the Environmental Taxes Act (section 36o), a deduction is granted on the regulatory energy tax that is payable for electricity generated using wind energy, solar energy, small-scale combined heat and power generation or plants operating on biomass only ('green energy'). This reduction also applies to natural gas in so far as it is produced from biomass. This scheme has been in place since 1996. In subsequent years, various other incentive schemes relating to the regulatory energy tax have been added. These are the exemption for users of green energy (section 36i), a deduction for electricity generated by waste incinerator plants (section 36r), a deduction for electricity generated using a plant for combined heat and power (section 36t) and the energy premium scheme (section 36p). Together, these schemes accounted for a loss of income for the national government of EUR 447 million (Miljoenennota 2003).
Tax-free income from green funds
In 2001, green certification was granted to projects with a total project capital of approximately EUR 913 million. The associated government expenditure amounted to approximately EUR 40 million.
The scheme (known as "groen beleggen") is designed to stimulate projects related to the environment, nature, biodiversity, energy conservation and energy renewal. The Ministry of the Environment grants green certification to projects that are intended to develop or maintain forests, nature and landscape, or to projects in the area of organic farming, sustainable energy and sustainable building. There are tax benefits associated with investments in these projects.
