Excise on Electricity as an EU Own Resource in the Light of Sustainable Development: The Case of Poland

The European Union (EU) own resources system should support sustainable development, understood as integrated social, economic and ecological growth. However the current system meets the sustainability criteria poorly and requires change. The High Level Group on Own Resources (HLGOR) recommends an Electricity Tax on consumption as one of the new bases for the EU own resources system. Taxes on electricity are recognized as environmental ones. They can be implemented at the stage of electricity production, distribution and consumption, and most analyzes indicate consumption as the most appropriate stage for reasons of simplicity and fairness. In addition, presently excise on electricity consumption is harmonized in EU Member States with minimum rates. The paper examines, on the example of Poland as the EU Member State, whether the excise duty on electricity supports sustainable development by fair taxation of households and thus is a suitable candidate for the EU own resources scheme. An empirical part of the paper consists of excise on electricity analysis in the context of incidence and distributional effects. Respectively, multi-variable regression model and Pearson concentration coefficient are used. The analysis shows that in the years 1993 – 2014 the excise duty on electricity could even be more than full shifted on households. Additionally the excise duty charged was not a significant fiscal burden for households, although it led to a regressivity in the taxation on their disposable income. The excise duty had no significant effect on the distribution of disposable income among households. With reasonable rates the Electricity Tax-based EU own resource is acceptable.