Prime Minister Mirek Topolánek introduced a timetable for green tax reform Jan. 3, and it is slated to come into effect in January 2008. The government will introduce a heftier levy on energy products and power.

It plans to revise those fees a few years later and, by the middle of the next decade, extend the tax to other raw material resources, products and services that hurt the environment.

Taxes will affect companies with production or consumption that has a proven negative effect on the environment and health, said Miroslav Hájek, director of the environmental economy department at the Environmental Ministry.

For example, a steeper tax on coal-powered operations will be among the first implemented.

The first phase of the green tax is expected to cause a 1 percent increase in electricity prices, a 3 percent rise in natural gas prices and about a 10 percent increase in the prices of raw materials, Hájek added.

The government hopes the increases will be balanced with lowered taxes in other areas, in order to prevent individuals' burdens from increasing. But most economists agreed the reform is likely to increase how much people pay.

"Examples from the world such as Germany indicate that green tax reforms are never really neutral, and they usually lead to an increase of the tax burden," Cyrrus analyst Jan Procházka said.

Those with low incomes, who already sit in the lowest tax brackets, will be hardest hit, he said. The Cabinet hopes to ease that impact by compensating people with lower incomes in the second and third phases of the reform, Hájek said.

Eyeing renewable sources

Local nongovernmental organizations and international organizations say Czech industry lags behind its EU counterparts on using nonrenewable resources efficiently.

A recent study by the Rainbow Movement (Hnutí Duha) environmental group comparing the Czech Republic to other European nations showed that Czech industries consume too much raw material, fail to use millions of tons of recyclable materials and do not use enough renewable resources.

The Rainbow Movement's study showed, for instance, that 185 euros ($240/5,140 Kč) of the country's gross domestic product is produced from 1 metric ton (1.1 short ton) of materials — six times lower than the average for the 15 original EU member states. That's also less efficient than the fellow "new" members Slovakia, Hungary, Poland and Slovenia.

The Czech economy consumes more than 4 million metric tons of industrial fertilizers, almost 13 million cubic meters (455 million cubic feet) of wood, more than 1 million metric tons of paper and 4 million metric tons of cement every year. These are mostly nonrenewable raw materials, the Rainbow Movement said.

The Organization for Economic Cooperation and Development (OECD) warned last year that utilization and recycling in a number of categories of waste in the Czech Republic were low compared with other EU countries.

When the Czech Republic joined the EU in 2004, the government pledged to increase the share of power output from renewable sources such as hydroelectric power stations or wind farms from about 4.5 percent to 8 percent by 2010.

The Czech Republic currently draws 16 percent of its power from renewable resources.

Furthermore, Topolánek vowed a commitment when presenting his Cabinet thesis to Parliament Jan. 19 that the government was ready to work toward reducing the current energy consumption 40 percent by 2020.

In addition to making energy use more expensive through green tax reform, the government came up with an initiative last fall to motivate businesses and individuals to turn to renewable resources.

Last September, in collaboration with the State Environmental Fund, the Environmental Ministry launched a support program for renewable resources that encourages businesses and individuals to apply for special state subsidies after they install solar water-heating systems, biomass heating and heat pumps.

Pavel Koška, spokesman for the State Environmental Fund, said the program would not be limited in terms of time or money, so applicants who meet all given requirements are guaranteed to receive the subsidy.