The Hungarian Presidency of the EU Council had drafted, on Thursday 5 September, a new compromise text on energy taxation (see EUROPE 13395/6). Agence Europe obtained this document. The aim is to discuss this in a working group on Monday 16 September. The discussion will focus on: - aviation and maritime navigation; - State aid; - the categorisation of energy products.
On the issue of fuel, Hungary suggests exempting aviation and shipping from fuel tax for the next 20 years. After 15 years the EU Council would, on the basis of a proposal from the Commission, examine whether all conditions are met to apply the same minimum level of taxation to aviation fuel as for motor fuels and the special lower minimum level of taxation to waterborne navigation and the standard minimum level of taxation applicable to electricity after the 20 years long transitional period. The examination should primarily focus on the availability of sustainable alternative fuels and electricity and on the international developments concerning the taxation of aviation and waterborne navigation.
The Presidency also proposes that where an energy product is composed of one or more energy products, Member States may determine the refundable amount of taxation on an average basis, in which case Member States shall define the scope of this average in a consistent, transparent and non-discriminatory manner. This could be, for example, the average composition of a given energy product over the previous 12 months or, as one Member State indicated at the previous meeting, taxing on a component basis, the six-month average based on tax returns.
Furthermore, according to the document, Member States may apply total or partial exemptions or reductions in the level of taxation to electricity as a single-use, under fiscal control. This electricity can: - be supplied through a standardised fixed or mobile interface to aircraft when those aircrafts are stationed at the gate or at an airport outfield position; - be supplied directly vessels berthed at ports.
With regard to State aid, the Presidency proposes that measures such as tax exemptions, tax reductions, tax differentiation and tax refunds may constitute State aid within the meaning of Article 107(1) of the Treaty on the Functioning of the EU. The information provided to the European Commission would not exempt Member States from the notification obligation under the applicable State aid rules.
Finally, following Poland’s proposal, the Presidency has taken into account the comment made by several delegations: certain products such as hydrogen are included in several categories, which leads to confusion. The proposal would refer to these products under different names, such as ‘hydrogen’, ‘low-carbon hydrogen’, ‘renewable hydrogen’. Hungary stresses that it is not possible to provide a complete and definitive list and wants to incorporate a certain degree of flexibility. If a product not listed in the table is used for taxable purposes in a Member State, that Member State may determine a unique conversion factor or may use the value of the equivalent fuel. If the category indicated in the table is not appropriate, Member States may deviate from the category indicated in the table. The Commission must be informed and may decide whether it is necessary to amend Annex II containing the categorisation table.
NGOs call the proposal “absurd”. Jo Dardenne, Director of Aviation at the NGO network Transport & Environment (T&E), called the proposal “absurd”. “With its proposal, the Hungarian government has completely obliterated the very purpose of this last piece of the Green Deal which was to put a price on dirty fuels. This is a farce”, she added. “The only solace is the conservation of a fuel tax for yachts and private jets - putting an end to the injustice enjoyed by the wealthiest”, she concluded.
“Such exemptions, which primarily benefit harmful and fuel-intensive practices in the fisheries sector such as bottom trawling, run counter to the need for an energy transition that guarantees the long-term viability and competitiveness of the sector”, warned Laurène Provost, Lead Lawyer at the environmental NGO ClientEarth. “Not only are these practices only profitable thanks to these tax exemptions on fossil fuels, but they also contribute to overfishing, which in turn threatens the sustainability of the fishing industry”, she added. (Original version in French by Anne Damiani)