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Green taxation trends in Europe boosting the economy

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Green taxation trends in Europe boosting the economy

How to boost the economy during recession, like the one caused by the COVID-19 pandemic? Scandinavian countries have found a recipe that has let them remodel their economy: green taxation.

What is green taxation?

Green taxation, as the name suggest, is the idea of using the tax system to encourage the use of environmental friendly products and procedures while penalizing polluting activities. However, green taxation entails a lot more than creating a new tax to be imposed on polluters and be done with it: it involves a complex regrouping of taxes, shifting tax burden from workers and businesses to the polluting activities themselves.

How can green taxation help during recession?

It is a widespread misconception that raising taxes pulls money out of people’s pockets and can lead to cutting jobs. However, results from over the last 30 years show that the opposite is true, and done right, raising the right taxes (while decreasing others) can create opportunities all over the market.

For example, the carbon tax introduced in Sweden in 1991 was accompanied by cuts to taxes “closer” to the people, like personal income tax, property tax, wealth taxes, and businesses’ social security contributions. This means that while people may pay more in carbon-intensive products like fuel, they pay less in other fields of life, so family budgets do not suffer – while more options are created for saving.

This way, introducing a green taxation shift can actually result in net job creation, while spending the surplus income productively, on the right projects, the economy of the country can get a real boost.

While implementation may be complex, the principles are simple: make the polluter pay, spend the revenue productively while improving the quality of life for all, and encourage the introduction of more environmental friendly procedures and technologies.

How about Hungary?

In Hungary, green taxation is not in the focus, although various subsidies are available for environmental friendly options to incentivize a green shift in energy consumption. However, implementing green solutions at your business may generate savings that you can used for additional value creation.

Helpers Finance offers accounting and bookkeeping services to small and middle sized companies in Hungary, including services such as business planning, tax and legal advisory, that let you optimize your company operation as well as keeping it compliant with regulations. If you are interested, just contact us through our form or in email, or call our office on +

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