An increase in taxes on the causes of air and water pollution in the European Union could generate revenues of EUR35bn (USD47.2bn) in real terms in 2016 alone, the European Commission has claimed in a new report. A new study from the European Commission on the potential for greener taxes, which pools data from 12 member states, looks at a move away from levies on labor, toward those on pollution. Tax revenues from greener taxes could reach EUR101bn in 2025, with the Commission predicting far higher figures were steps also taken to remove environmentally harmful subsidies.

Of the 11 EU member states included in the study, the potential revenues that could be generated range from just over 1 percent of gross domestic product (GDP) to 2.5 percent of GDP, depending on the nation. The suggested taxes should have relatively low administrative costs, compared with other levies.

The report recommends that where possible administrative costs could be lowered by collecting green taxes through existing mechanisms. This might include making use of existing reporting or monitoring obligations to simplify compliance.