Friday, 29 June 2007

EU hopes to raise taxes: The Energy Tax Directive

Currently, the taxation of energy products and electricity in the EU is governed by the 2003 Energy Tax Directive. Last March, the European Commission presented a proposal for amending the Energy Tax Directive in order to raise the minimum levels of taxation for gas and oil established at Community level.

According to the Commission, its proposal will reduce distortions of competition in the haulage sector, it will protect the environment and also diminish Member States budgetary losses from fuel tank tourism. The UK government believes that this proposal “will have a positive impact on the environment by reducing fuel tank tourism, so lowering fuel consumption and associated emissions."

Moreover, it would have no impact on UK fuel duty rates as they are already above the new minimum that would be introduced. Hence, the UK government’s main concerns are the possibility of a mechanism being created for implementing any differentiation between commercial and non-commercial diesel rates as well as the matter of implementation provisions for a refund mechanism being subject to qualified majority voting.

The government does not favour a harmonised approach since it considers that the most suitable way of implementing a differential should be up to the Member States. Therefore, Member States should maintain flexibility in this matter. Moreover, the government does not support the Commission proposal of implementation provisions being subjected to the qualified majority vote, since a policy of fiscal matters are determined by unanimity. Hopefully, the UK government would veto this proposal if the text is not amended with regards to this issue.

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