The energy sector is a major contributor to environmental problems. The introduction of environmentally effective and economically efficient policy instruments in order to minimize negative impacts on the environment and ensure rational use of the natural resources is an essential goal of the EU environmental policy. Energy policies vary between Member States of the EU: there are different structures of energy supply with different endowment of energy resources, fiscal policies, industrial structure and degrees of economic development and different environmental priorities and problems. There is a certain unwillingness of some Member States to increase the tax competence of the European Community in the energy sector.The Commission decided to address this issue and recently adopted a proposal for a Council Directive on Restructuring the Community Framework for the Taxation of Energy Products. The objectives are to eliminate distortions between different types of fuel which in practice are often substitutes for each other, and, to improve the environment. If adopted by the Council, this proposal will replace the existing Community legislation concerning excise duties on oil.
The proposal enlarges the scope of excise duties to cover all energy products, including hydrocarbon oils, natural gas, electricity and solid fuels which are used as motor fuel or for heating. The proposed minimum tax rates are at least 33% higher than existing minimum rates for hydrocarbon oils. The proposal also recommends member states to avoid increase in the overall tax burden by simultaneously reducing statutory charges on labor. The proposed Directive repre-sents a shift of energy taxation towards the use of natural resources which damage the environment and take taxation burden away from labor.
Commission of the European Communities: Proposal for a Council Directive on Restructuring the Community Framework for the Taxation of Energy Products. Communication from the Commission COM (97) 30. For more information, contact: European Commission DG XI, Directorate B - Environmental Instruments, Economic Analysis and Environmental Forward Studies. Rue de la Loi 200, B-1049 Brussels. Fax: +32 2 296 95 59.