EU Finance Ministers To Move On Energy Tax Dispute

by Ulrika Lomas, Tax-News.com, Brussels

09 May 2002

At a meeting of European Union Finance and Economy ministers this week, it was agreed that finding a solution to the problem of energy taxation must now be a priority , and a high level panel of experts was authorised to examine the issue and present proposals within a month.

A European Commission directive to establish a minimum common tax on energy products such as gasoline, diesel oil, natural gas, and electricity, was designed to reduce energy use, and limit competition divergence among EU member states.

The plan has been under discussion for five years, but the negotiations have been lent increasing urgency by the fact that failure to find a solution could interfere with an already agreed-upon accord, which will throw electricity and gas markets for professional users open to free competition by 2004.

Spain, which currently holds the rotating EU presidency, has proposed a compromise whereby only energy products used for fuel and heating would be affected by the common tax. However, this is unlikely to be accepted by countries such as the United Kingdom and Ireland, which want heating oil for private homes exempted from the levy.

According to a report in the EU Business news service, one European diplomat dismissed the Spaniah proposal - which will be considered by the panel of experts and analysed at the next EU summit - as 'window dressing aimed at gutting the plan of most of its substance'.

EU Internal Market Commissioner, Frits Bolkestein has also slammed the plans, explaining that: 'The more exemptions there are, the more a European directive will look like a Swiss cheese.'

Recommended