Excise duty is an indirect tax on the consumption or use of a product. Excise duty is mainly levied to increase the central government's income from taxes. Several excise duties also have goals related to e.g. environmental control.
Focus on taxation based on environmental and health issues
According to the Government Programme, taxation will be moved from the taxation of work and entrepreneurship towards taxation of consumption based on environmental and health issues. The goal is to reduce taxation that is harmful to economic growth, and at the same time to ensure that taxation is fair. Excise duties or climate taxes are key in combating climate change. The focus of the taxation of fuels used in transport has been moved towards a carbon dioxide tax. The excise duty on beverage packages has directed people to use recyclable packaging, and the tax on waste has effectively reduced the amount of waste that ends up in landfill.
In 2015, a total of €6,811 million in excise duties were collected, which corresponds to roughly 17% of the total tax revenue of the state. The largest excise tax bracket includes energy taxes, with a total tax revenue of €4,309 million in 2015. Economically significant tax brackets also include the excise duty on alcohol and alcoholic beverages and the excise duty on tobacco products.
Harmonised excise duties in the EU Member States are regulated by a directive. The directive is implemented via national legislation. The harmonised excise duties apply to alcohol and alcoholic beverages, most tobacco products, liquid fuels, electricity, and certain other fuels.
National non-harmonised excise duties are levied on soft drinks, beverage packages, and waste delivered to municipal landfill sites.
The system of excise duties also includes tax expenditures. The most significant energy tax expenditures include the lower tax rate for diesel fuel, the tax rate for light fuel oil for working machines that is lower than diesel, the lower electricity tax rate for industry and greenhouses and the tax expenditures for energy-intensive industries. Machine rooms were also included in the scope of lower electricity tax rate in 2014.
The general procedures for national excise taxation are regulated by the Act on Excise Duty. Each excise duty or group of excise duties is laid down in detail in its own Act. The Tax Administration is responsible for implementing the excise duties.