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The Life and Death of the Dutch Groundwater Tax

Water Policy 15(6):1064-1077

15 Pages Posted: 23 Apr 2012 Last revised: 28 Nov 2013

Marianne Schuerhoff

Wageningen UR

Hans-Peter Weikard

Wageningen UR - School of Social Sciences

David Zetland

Leiden University - Leiden University College

Date Written: August 1, 2013

Abstract

We examine the Dutch national groundwater tax (GWT) – a ‘win–win, green’ tax that promised to reduce distortions by simultaneously reducing the income tax burden and improving environmental outcomes. We find no evidence of these impacts. Instead, we see that the GWT increased distortions by taxing a narrow base (a few drinking-water companies reliant on raw groundwater) and interfering with groundwater management programmes funded by an existing provincial groundwater fee. The Dutch government revoked the GWT for being fiscally inefficient and environmentally unhelpful on 31 December 2011, but this story provides some useful lessons.

Keywords: Green tax, groundwater, Pigouvian tax, fiscal policy, regulation

JEL Classification: H23, Q28, Q56

Suggested Citation

Schuerhoff, Marianne and Weikard, Hans-Peter and Zetland, David, The Life and Death of the Dutch Groundwater Tax (August 1, 2013). Water Policy 15(6):1064-1077. Available at SSRN: https://ssrn.com/abstract=2043763 or http://dx.doi.org/10.2139/ssrn.2043763

Marianne Schuerhoff

Wageningen UR ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

Hans-Peter Weikard

Wageningen UR - School of Social Sciences ( email )

De Leeuwenborch
Hollandseweg 1
6706 KN Wageningen
Netherlands
+31 317 48 24 94 (Phone)
+31 317 48 49 33 (Fax)

David Zetland (Contact Author)

Leiden University - Leiden University College ( email )

P.O. Box 13228
Den Haag, 2501EE
Netherlands

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