Environmentalists Call For VAT-Free Public Transport In Budget Package

Friends of the Earth argue that a 12% VAT on public transport would have undesirable environmental and social effects. Photo credit: KK / BD. 

Prague, May 30 (CTK) – Environmentalists from the Czech Friends of the Earth movement have proposed, in their comments on the government’s draft budget consolidation package, to exempt public transport from value-added tax (VAT), arguing that a 12% VAT on public transport would have undesirable environmental and social effects.

In their comments on the package, available on the government website, the group also disagrees with increasing VAT on repairs to shoes, leather goods and bicycles from 10% to 21%, saying this would provide further disincentives for repairing goods, rather than throwing them away and buying new. Friends of the Earth proposes that product repairs be moved to zero-rated VAT.

All other government proposals on taxes and charges are positive from the environmental point of view, according to the movement, but none are sufficient, and will not bring as much money or create as much incentive to protect the environment as they could. For example, the increase in the tariffs on mined lignite could be higher. The government’s proposal envisages an increase from 3% to 6%.

“An analysis of the operation of brown coal companies shows that it would be possible to increase the fees up to 10%,” the environmentalists wrote.

They have a fundamental objection to the level of air pollution charges, which they say has been low for a long time and does not function as an effective tool to reduce pollution. Friends of the Earth propose to gradually increase air pollution fees, doubling the current fee in 2025 and further raising it by 5% every year from 2026 onwards.

“The values should actually be much higher. According to the methodology of the Environment Ministry, externalities (damage caused by these types of pollution) are about 15 times higher than the proposed increase in rates,” the environmentalists said.

A new charge should also be introduced for mercury pollution, they added.

The movement also has reservations about the energy tax. It opposes the exemption for households and domestic boiler houses that use gas for heat production. On the contrary, it proposes an exemption from the electricity tax for self-generation and sources up to 30 kW for all renewable sources.

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