Development of the environmental subsidization in the EU and Hungary

• Author: Zoltán Nagy
• Position: Associate Professor, University of Miskolc, Faculty of Law, Department of Financial Law
• Pages: 73-84

LESIJ NO. XX, VOL. 2/2013

DEVELOPMENT OF THE ENVIRONMENTAL

SUBSIDIZATION IN THE EU AND HUNGARY*

Zoltán NAGY**

Abstract

The recent study deals with the subsidy issues of environmental policy through the a nalyses of the

problems of regulation in the EU a nd Hungary. Among economic regulators subsidies ha ve got to the focus

of literature analyses only recent days. Fro m the perspective of subsidies the author is primarily concerned

with direct subsidies but the broad range of indirect subsidies (tax allowances, tax exemptions) ar e also

sketchily dealt with. The fundamental target of environmental policy is to decrease environmentally har mful

activities and to subsidize environmentally effective activities. In order to r each this target the policy of the

EU has a significant role, a s the Hungarian domestic subsidy scheme is based on EU subsidies almost

absolutely from the aspect of sources. The study gets to the conclusion, through the display of different subsidy

forms, that no efficient environmental policy can be achieved without a properly regulated subsidy policy.

Keywords: environmental subsidy, financial subsidy, environmental policy, EU subsidy,

budgetary policy, protection of environment.

1. Introduction

Economics among other economic regulators dealt with the issue of environmental taxation

a long time ago but subsidies just get in to the focus of analysis recently. An important principle

of economics and environmental politics states that the polluter should pay

1 for the harm caused

thus achieving social-economic optimum. In terms of economics a twofold problem emerges

concerning the subsidies. It is the failure of the regulation if the polluting activity receives

subsidies but also if such activities which produce positive externalies are not supported by th e

state with enough subsidies. So the basic aim of the environmental policy is the stopping of

environmentally harmful subsidies and the providing of environmentally useful subsidies 2.

Particularly the environmentally harmful subsidies raise more problems in order to enforce an

effective state subsidies policy from the aspect of achieving the aims of environmental policy3.

There are various forms of direct financial subsidies but the forms of indirect subsidies are

almost inexhaustible. Such as the partial regulation, the insufficient control, tax exemptions, tax

allowances, the undervalued usage of natural resources. The harmonization of the European Union

took significant steps in this issue.

* This research was (partially) carried out in the framework of the Center of Excellence of Mechatronics

and Logistics at the University of Miskolc.

**Associate Professor, University of Miskolc, Faculty of Law, Department of Financial Law (e-mail:

jogdrnz@uni-miskolc.hu).

1 About the principle, see Csilla űSÁK: Thoghts about the problems of the enforcement of the "polluter

pays" principle, European Integration Studies, 2011/1, p. 27-35.

2 Károly KISS: Zöld gazdaságpolitika, ŰKÁÉ, Űudapest, 2005. p. 171-172.

3 Károly KISS: Tiltandó támogatások – környezetvédelmi szempontból káros támogatások a magyar

gazdaságban, L’Harmattan, Budapest, 2006. p. 13-17. The author approaches the environmentally harmful

subsidies from the side of activity, in other words subsidies given to environmentally harmful activities are

counted as environmentally harmful subsidies. About the EU’s environmental policy, see űSÁK:

Environment Policy. In: Zoltán ANGYAL (Ed.): Public Policies of the European, Editura Universitatii "Petru

Maior", Târgu-Mureş, 2008. p. 143-147.