In 1999, 2000 and finally in 2003 we carried out the impact assessment of the „air load fee” (ALF, emission taxes on SO2, NOx, dust and CO) legislation proposal for the Ministry of Environment. In our study we analysed not only the expected impacts (macro-economic, sectoral and environmental) of the given drafts but also the possibilities of alternative emission taxes. We examined the alternative uses of tax revenues (e.g. earmarking for environmental protection, the air load fee revenue as an item for reducing the budget deficit, as well as the budget-neutral reinvestment of the air load fee revenues through the reduction of employers’ social security contribution), as well as the combination of the air load fee with energy taxes, and the joint application of emission taxes with command-and-control type regulation. We carried out our analysis mainly supported by a macro-economic computable general equilibrium model which includes an environmental module. At the same time we also prepared another model, which is driven by cost-minimising behaviour, much the same as a corporate leader may make investment decisions. We also presented the economic background of emission taxes. Our results in connection with the different regulatory options were summarised in the framework of a cost-benefit analysis, but we also evaluated them from the point of view of the National Environmental Protection Program (NEPP), Hungary’s international responsibilities, and other environmental- as well as economic policy objectives. Furthermore, we made several suggestions (based on theoretical and practical considerations) by which in our opinion the economic efficiency, the practical feasibility and the political acceptance of the draft legislation would be improved. The ALF has eventually been introduced since January 1, 2004.
