Brussels, 13/04/2011 (Agence Europe) - A “greener” energy tax that is more beneficial for clean energy and will stimulate growth and jobs by making consumers pay the tax burden that is currently on labour. These are the aims pursued by the European Commission and EU Energy Commissioner Algirdas Šemeta, who unveiled a draft revision of a 2003 energy tax directive on 13 April (see EUROPE 10355). The aim is for the new law to come into force in 2013. It would have an 11-year transition period (until 2023) to allow the member states and industry to adjust, and has already generated a wealth of reaction from industry and politicians.
The energy tax directive currently sets lower limits on taxation for electricity, fuel, heating, fuel used in farming and transport (not air transport), but is biased because it taxes the more contaminating forms of energy less than biofuels, for example, on which some of the heaviest duty is levied. The revised directive will put all energy on an even footing and increase the lower limits while avoiding carbon leakage as far as possible. In the new set-up, the minimum taxation will be two-pronged - tax on carbon missions (€20 a tonne) and tax on the energy content (net calorific value in gigajoules) with a minimum tax of €0.15 per gigajoule of energy used and €9.6/Gj on fuel. This would mean that the same tax would apply per gigajoule, irrespective of the type of fuel used.
When it comes to the impact of the changes, particularly on diesel used in transport (the minimum duty would be the same as for petrol - meaning a hike from the current €330 per thousand litres to €412 per thousand litres in 2018) the commissioner points out that industry and the member states are being given a transition period to adapt to the new taxes. He added that many member states already charge higher duty on fuel than set out in the Commission's plans and the impact of the directive is expected to be minimal in seven years' time. On the social impact of increasing fuel duty on heating, the commissioner said that the member states would have the option of making household energy used for heating, irrespective of the course of energy, fully tax-exempt. The new EU rules could have a big impact in terms of jobs (affecting 1 million jobs by 2013) because of the changes it will encourage in the push to make industry greener.
Reaction has been fast and furious. COPA-COGECA, representing farm cooperatives and farmers, which had been calling on the Commission to exempt farming, horticulture and forestry from fuel duty, says that the Commission's ideas run the risk of reducing European farmers' competitiveness, increasing unemployment in the countryside, and encouraging farming to shift to areas without the fuel duty (outside the EU, in other words). It suggests that “red diesel” used in farming could be made tax-exempt if research to be completed at the end of next year demonstrated that levying duty on farmers would lead to carbon leakage. Refining industries are delighted about the idea of a tax that would penalise diesel to the benefit of petrol and new fuels because this would benefit an industry that the EU exports to other parts of the world. The Left at the EP has welcomed the reforms which, according to the S&D, should help the EU meet its energy and climate targets and encourage the economy by shifting the burden of taxation from work to pollution. It would also create more jobs, say the Greens, criticising the fact that aviation would still have tax-free fuel. Unsurprisingly, the UK Conservatives hope that the British government would veto the new energy tax because it would be a heavy burden on road transport, would increase the price of goods in the shops and have a serious and negative impact therefore on the economy. (F.G./transl.fl)