Impact Project: Tax differentiation for climate-adaptive buildings: tax or reward rainwater
This report was written as part of the impact project 'Tax Differentiation for Climate-Adaptive Buildings'. The idea for the project originated within the Green Roofs Green Deal. The basic idea was simple: if a green roof reduces the amount of rainwater entering the sewer system and water treatment facilities, the owner of that roof could pay less tax. Conversely, property owners who do not take such measures could face higher taxes because of the increasing costs of rainwater drainage. The project examined the legal, regulatory, financial and practical aspects of tax differentiation.
The project ran alongside a national study into the possibilities of tax differentiation by the Commission for Tax Reform (CAB) of the Dutch Water Authorities. To ensure the project stayed connected to these ongoing developments, a team of experts was brought together. In cooperation with the municipality of Enschede, the water boards Aa and Maas, De Dommel and Vechtstromen, and other members of the Green Deal working group on Tax Differentiation, the team explored the opportunities and limitations of tax differentiation.
Differentiation through property tax (OZB) appears to be difficult because of legal and practical objections. Since property tax is only a small percentage of the official property value (WOZ), other forms of tax differentiation may offer more possibilities. A national change in legislation could help ensure equal treatment and legal certainty for all property owners.
The study also showed that tax differentiation is more complex than expected. The financial effects for residents, property owners, government finances and local taxes are still unclear and require further research. Such research could also help determine the size of possible tax benefits and how these could support national environmental goals. At the same time, it is clear that tax differentiation could increase awareness about the use of rainwater in and around buildings.
Results
It soon became clear that differentiating the sewerage levy could be a feasible way to reduce the amount of rainwater entering the drainage system. Current legislation already offers some room for this. However, it would require changes to the existing sewerage levy and could lead to a different distribution of the tax burden. Moving forward with such changes requires political and administrative support, based on the idea that this can help make cities more sustainable.
The study also looked at the water system levy and the wastewater treatment levy charged by water boards. It showed that differentiation within these taxes is currently not easy to introduce and would require changes to national legislation. One of the conclusions was that an additional discount scheme could become possible if the legal framework is adjusted to allow tax differentiation.
Contact person
Carleen Mesters
Stroom en Onderstroom
+31 (0)6 21 50 89 14
vraag@carleenmesters.nl
Anne-Marie Bor
NextGreen
06 12 63 40 71
info@nextgreen.nl