Green Local Fiscal Autonomy in EU Member States

This article provides insights into how differences in the degree of fiscal autonomy of local governments in EU Member States shape the ways in which they design and implement fiscal instruments to support the achievement of climate objectives. By comparing three countries (Belgium, Italy and the Netherlands), it demonstrates that local governments’ capacity to leverage taxation for climate purposes is essentially shaped by their
national legal and fiscal frameworks. At the same time, limited fiscal autonomy does not necessarily prevent local authorities from using fiscal instruments to support the achievement of climate objectives. This is illustrated, for instance, by the introduction of the ‘pay-as-you-throw’ (PAYT) waste fee in Turin, where such a measure can be implemented despite the relatively limited fiscal autonomy within the centralized Italian system.
The article further shows that local climate plans across the EU acknowledge taxation as a policy tool for advancing sustainability goals, highlighting its potential to influence areas such as mobility, buildings and energy