Spain ranks 26th out of 27 EU countries in terms of the weight of environmental taxes with respect to GDP. Green taxation accounts for 1.77% of Spain's gross domestic product (GDP), well below the European Union average of 2.37%, according to Eurostat data for 2019 (Eurostat, 2022[1]).
The lack of nationwide environmental taxes related to waste management in Spain has been one of the main causes of the poor performance of the country in this area (Castells-Rey, Pellicer-García and Puig-Ventosa, 2022[2]). For example, Spain in 2020 recycled only 40.5% of its Municipal Solid Waste (MSW) while the EU-27 average was 49.2% (Eurostat, 2022[3]), Figure A.A.1 shows the EU overview of MSW recycling rates. Thus, it has not accomplished the MSW recycling target of 2020 (50% of the MSW), and it will be a challenge to accomplish the recycling target of the upcoming years summarised in Table 7.A.1 in Annex 7.A. Traditionally, environmental taxes in Spain are mainly regional taxes that were promoted and implemented by some Spanish Autonomous Communities. Nevertheless, the situation has recently changed as two environmental taxes were included in the national Spanish law on waste and contaminated sites for a circular economy (Boletín Oficial del Estado, 2022[4]).
This chapter provides recommendations for policy reform at regional level to the Andalusian regional government (hereafter “Junta de Andalucía” or “Junta”) on how to use its tax competencies to promote a Circular Economy (CE) and improve waste management. Such tax instruments could be used to address the material circularity within the region, as well as to increase waste prevention and improve its waste source separation and recycling rates. In addition to environmental taxes, other economic instruments (such as Extended Producer Responsibility) are vital to operationalise the Polluter Pays Principle (PPP) (European Commission, 2021[5]). The latter aims at changing the polluting behaviour and ensures that polluters compensate society for the costs caused by their activities.
The scope of the work includes reviewing existing tax instruments in Andalusia related to the circular economy and waste management, assessing their alignment with the goal to improve environmental quality while raising revenue and accounting for distributional concerns, and discussing possible additional tax interventions, with a view to identifying strategic reform options. The work includes a stocktake assessment of economic instruments used in this area at the EU, national, and regional levels. It identifies opportunities for complementary tax-based interventions at the regional level and analyses the environmental, economic (including revenue generation and distributional impacts), and behavioural implications of several possible taxes.
