Switzerland Imposes Carbon Tax on Heating

6 July 2007

Tax-News.com. Switzerland is imposing a tax on carbon emissions to enable the country to meet its commitment under the Kyoto Protocol.

The CHF12 (€7.24, US$9.85) per tonne of CO₂ charge on fossil fuels used for heating (heating oil, natural gas) is being introduced in accordance with the decisions adopted by Parliament in March and by the Federal Council in June 2007. The CO₂ Ordinance requires the introduction of a levy in January 2008 if CO₂ emissions from heating and process fuels have not been reduced by at least 6% in 2006, compared with 1990 levels.

The CO₂ statistics published on June 28 by the Federal Office for the Environment (FOEN) show that this target has not been met. Emissions in 2006 amounted to 95.4% of those in 1990, while the target was 94%. Although energy consumption declined between 2005 and 2006, a more substantial reduction would have been expected in view of the mild winter, the government said.

The charge is equivalent to a levy of approximately CHF0.03 per litre of heating oil and CHF0.025 per cubic metre of gas.

According to the government, the levy is not a tax but an incentive measure, the revenues from which are to be fully redistributed to members of the public via health insurance companies and to businesses as a percentage of wages paid. Revenues collected in 2008 are to be redistributed in 2010.