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Call for breakthrough on EU energy - European Environmental Bureau

03 June 2002, 15:17 CET

The negotiations on the Proposal for a Council Directive restructuring the Community framework for the taxation of energy products have not resulted yet in an adoption since it was put forward by the Commission in 1997! The EEB understands there are various reasons for disagreement on the specifics of the proposal.

However, this Directive is an essential, indispensable, first step in providing the market with the right incentives to promote sustainable development. "The European Council, in Goteborg, underlined the
importance of "getting the prices right", and failing to do so will mean that the market will continue to produce serious environmental problems. Nowadays pollution pays, and preventing pollution costs. We have to turn this around." says John Hontelez, EEB Secretary General.

The EEB deplores that too many tax exemptions are being considered in the current negotiations. The list of energy intensive industries to be exempted is being extended while households and public administrations may benefit from total exemption if Member States require it. A lower tax rate for professional diesel fuel is being discussed too.

The EEB understands that some sectors are more sensitive than others to the price of energy. However, increasing energy taxes to a level that better reflects the real price of energy and transport use for the environment and public health is an essential element for applying in practise the
"polluter pays" principle.

The difficulties of the road haulage industry have other causes than the fuel prices. These causes must be tackled without jeopardising the overall EU energy fiscal policy.

The minimum EU tax rates for mineral oils, covered by Directives 92/81 and 92/82, and part of the 1997 directive proposal, have not been updated for ten years. "It is fundamental that an agreement on the new rates is
concluded now, with no derogation for professional diesel fuel", says John Hontelez.

The EEB calls upon the EU Finance Ministers to take a visionary decision, despite the practical problems, and adopt the proposed directive, in a version no weaker than the original proposal of the Commission. We are convinced that the problems are exaggerated and can be overcome. And in the Ecofin report to the Nice Summit, Ministers have clearly confirmed the need for such action. "IT IS TIME FOR POLITICAL LEADERSHIP, IT IS TIME TO ACT!" says John Hontelez.

The European Council in Barcelona called upon the ECOFIN Council to come to a decision by the end of the year. However, an earlier decision would be important for the EU's international profile. The EU is working on an energy initiative for the upcoming World Summit on Sustainable
Development, in Johannesburg. It needs credibility in order to get support from other players. A decision to start introducing environmental taxation across Europe is an excellent way to seek this credibility, and to help achieving the EU Kyoto target of a cut of 8% of CO2 emissions. The fiscal neutrality of the new taxes can even help boosting job creation, if the tax revenue is recycled towards cuts in labour taxes, as recommended in the 1997 original text.

The EEB sees an EU agreement on energy taxation as a first step for "getting prices right" and for Environmental Fiscal Reform (EFR). EU minimum energy taxes including electricity, gas and coal will allow for internal market efficiency and for further progress on EFR at EU and national levels. In its campaign for Environmental Fiscal Reform, the EEB demands an additional 10% tax shift from labour to environmental use until 2010. Such a shift, revenue neutral, would help protect both the environment and employment. The EEB also demands a removal or reform of all environmentally adverse subsidies until 2005, as well as other measures.

Environmental Fiscal Reform campaign website

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