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Energy Taxes in CEE
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In the past few years, several reforms have brought tax policies for energy in CEECs closer in line with EU Member States. Additionally, previously existing economic instruments, in particular air emission charges and fines, continue to contribute substantial revenues earmarked for necessary environmental expenditures in CEECs (see related article). While it is clear from a review of 1999 policies, tax rates, and tax revenue spending programs that distinctions continue to exist between CEECs and EU Members, much progress has been made in recent years in the continued reform of energy tax policies.
An analysis of excise taxes for motor fuels (petrol leaded, petrol unleaded and diesel) shows some variation between the countries the countries of the region. Figure 2 in the Supplement describes excise tax rates in the CEE countries for 1999 and it shows that Hungary and Slovenia have the highest tax rates introduced for motor fuels and are in line with EU minimum excise tax rates. The lowest taxes levied on motor fuels can be found in the three most northern countries Estonia, Latvia and Lithuania as well as in Bulgaria and Romania. The tax rates in the other four countries, Czech Republic, Poland, Slovakia and Croatia, are in the mid range. A more detailed analysis of these tax rates reports some interesting results: Slovenia is the only country in the region which introduced a CO2 tax on fuels. Diesel is taxed higher than unleaded petrol in Slovenia. When compared with the development in EU Member States it can be reported that diesel is taxed at a higher rate than unleaded petrol only in the UK. The same situation can also be found in Switzerland. The EU recommendation of a tax differential of 50 EUR per kl between leaded petrol and unleaded petrol is only achieved in Slovenia (it should be noted that leaded petrol is not for sale in Hungary, Lithuania and Slovakia). Croatia has a difference of 40 EUR per kl between these two motor fuels. The gap between leaded petrol and unleaded petrol in most countries is in the range of 20 and 30 EUR per kl. Czech Republic and Estonia, however, have no tax differentiation at all. Figure 2 in the Supplement also compares the tax rates with the EU minimum tax rates for these three motor fuels. The minimum excise taxes are laid down in the Directive 92/82/ECC and have been adopted by the Council on 19-10-1992. The rates for leaded petrol, unleaded petrol and diesel are exceeded only in two countries; i.e. Hungary and Slovenia, and in the Czech Republic for unleaded petrol. An interesting comparison can be found between the tax rates levied on motor fuels of CEE countries the four Cohesion Fund countries. While the Cohesion Country do have slightly higher nominal tax rates, these differences are almost negligible if for example the situation between Hungary, Slovenia and Greece is compared or if the tax rates levied on diesel in Slovenia with the tax rates of diesel in these four EU Member States are considered. All EU Accession Countries in the region and Croatia have implemented excise taxes on the three main motor fuels (leaded petrol, unleaded petrol and diesel). However, excise taxes on other motor fuels (LPG and kerosene) are only introduced in a small number of the countries in the region; for example the use of LPG for transportation is subject to an excise tax in the Czech Republic, Estonia and Slovakia. Minimum excise duties also exist for these types of motor fuels on the EU level which means that CEECs have to implement such taxes to achieve EU Directives or to increase the existing ones.
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