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The history of legislation for an air pollution fee in the Czech Republic does not start with its formal establishment of a country in 1993, but rather dates all the way back to 1967. Yet, as mentioned previously, due to political and social unrest in the country during this time, the legislation was ineffective. There was updated environmental policy instituted in the early 1990s, however it was only effective from a fiscal standpoint for the state government. However, in the early 2000s, reform started to take place in the Czech Government for enforcing environmental policy. After the elections in 2002, the government set one of its goals to reform the environmental taxes following the revenue neutrality principle. This policy implementation took various attempts in 2007 and 2008, placing taxes on solid fuels, natural gas, and an electricity tax.

The most recent legislation specific to air pollution, however, to be passed in the Czech Republic with the aim of curbing the environmental damage from the nation was passed in 2012, and is known as the Air Protection Act, or Act No. 201/ 2012 (Rakovský, 2). The air pollution fees implemented in the Czech Republic in the 1990s were separated into two source categories charged: large sources and medium sources. The large sources are defined by thermal units about 5 MW and most important technologies such as production of coke, steel and iron, cement, oil, etc. Medium sources are thermal unites within the range of 0.2 MW to 5 MW and other technologies. The rates themselves are related to the damages to the environment and are defined by a per ton basis of each main air pollutant (Study of Environmental Charges, 1). For instance, for SO2, the tax rate is 1,000 CZK/ ton. NOx is 800 CZK/ ton, and Hydrocarbons are 2,000 CZK/ ton. The largest tax rate is the air pollutant hard freon, taxed at 200,000 CZK/ton (Study of Environmental Charges, 1). The revenue goes to the State Environmental Fund (SEF) and is used to finance programs related to air pollution (Study of Environmental Charges, 1).

While many of the above tax rates are still in place, a new act introduced in 2002 separated sources of pollution further into stationary and mobile sources. Stationary sources covers devices of internal combustion or other technological processes that pollute air. All sources were divided by their size, or nominal thermal output and classification, and carried out by the payer of the fee. With a primary goal of motivating businesses to reduce their emissions, the new air pollution charges include an act that offers deductions in fees that businesses pay and are formed in a comparison with emission concentrations relevant for the best available technologies (Rakovský, 3). Therefore, there is an increased fee rate to begin with from prior legislation on emission levels, however the fee will continue to increase in future years. In 2017, the fee began to be “...multiplied by the coefficients of emission levels, according to achieved emission concentrations during the fee period, expressed as a percentage of the upper limit of emission levels associated with BAT…” (Rakovský, 3). In other words, businesses that release less emissions will pay a reduced fee. The 2012 legislation is already making more of an impact on the reduction of emission levels due to the higher fee rates associated with the policy. The prior policy partially failed due to how low the rates of the fees were. In fact, the Institute for European Environmental Policy found that prior to 2012, many of the costs for the administration of the fees were higher than the achieved revenues from the fees themselves. Furthermore, there was little incentive to reduce emission levels due to these low fees and
consequently minimal consequence for ignoring them.

When analyzing the effectiveness of these new fees in 2012, it can be seen that the air quality in the Czech Republic has improved in terms of absolute levels of NOx and PM10 from 2008 to 2013 (Rakovský, 4). That being said, the fees have not raised as much revenue as would be expected by european environmental experts, partially due to a decrease in industrial production after 1990 and the legal penalities if emission limites were exceeded. In addition, also preventing the act from achieving efficiency is the fact that the act fails to properly address the negative impact of transport. Diesel is granted preferential tax treatment despite its higher carbon and air pollutant emissions. Furthermore, while a green tax applies to the registration of second-hand, high-polluting cars, the emission criteria has not been adjusted for the evolution of the car markets, and consequently, old car registrations have increased. The main source of local air pollution are road transport and fossil fuel combustion for residential heating (OECD, 5). The OECD analyzed the legislation implemented in the Czech Republic to measure the effectiveness of these policies. As of 2016, they found that while air pollution is declining, the rate of mortality from ambient air pollution is nearly twice the OECD average, and that associated welfare costs are estimated to have equalled 6% in GDP.

The graph featured above, provided by the OECD, displays premature deaths from exposure to particulate matter and ozone per million people in 2016, with the Czech Republic ranking among the highest for mortality from air pollution. There are a few things that the Czech Republic could continue to work on in attempts to reduce the level of air pollution throughout the country. One popular policy recommendation by many environmental policy experts is to extend distance-based charging to address air pollution and congestion. Also, it would be beneficial to further tighten environmental standards of vehicle taxes to provide incentives for cleaner, more sustainable vehicles. Furthermore, it would be more efficient to make public transport in the Czech Republic more accessible with the aim of reducing the dependency on cars, as cars are the primary mode of transport currently from Prague into the surrounding areas (OECD, 9).

Works Cited

“Environmental Taxes And Charges In CEECs - The Czech Republic .” Study of Environmental
Charges in the EU , vol. 3, https://ec.europa.eu/environment/enveco/taxation/pdf/annex3.pdf.
“OECD Environmental Performance Reviews.” OECD , 2018,
http://www.oecd.org/env/country-reviews/OECD_EPR_Czech_Rep_Highlights_ENG.pdf .
Rakovský, Peter. “The Air Pollution Fee in the Czech Republic.” Institute for European
Environmental Policy , Dec. 2016,
https://ieep.eu/uploads/articles/attachments/7e40a844-5aab-490e-8eec-208d8095168c/CZ
Air Pollution Fee final.pdf?v=63680923242.