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EU Commission Threatens Member States With Carbon Tax

The EU’s new taxation commissioner, Algirdas Šemeta, will revive debate on harmonised minimum CO2 tax rates on fuels at EU level, and plans to table fresh proposals as early as next month, it has emerged.

The commissioner wants to discuss the legislation with his colleagues in the college of commissioners in the second half of April, with a view to presenting proposals in April or May, a Commission spokesperson said. But she admitted that the timetable would depend on how the internal discussions go, and said May could be a more realistic goal.

The proposal would overhaul the EU’s existing energy taxation directive to bring it into line with the bloc’s environmental priorities. Currently, the law sets minimum tax levels that EU states must levy on fuels according to volume consumed.

By contrast, the upcoming proposals would base taxation on the CO2 content of the fuels on the one hand, and their energy content on the other. This means that fuels like coal, which emits a large amount of CO2 but has a low energy content, would be taxed most heavily.

Šemeta’s predecessor László Kovács had already made it a priority to introduce a CO2 tax back in 2008, but his draft proposals proved too controversial to pass through the Commission.

But Šemeta believes that the momentum is now right to table new proposals, with a new Commission in place and pressing climate change commitments on the horizon, his spokesperson said.

She said that the proposals would be based upon the same concept as the draft worked out by the previous commissioner. This time, however, they would include some “fundamental differences” that should make the legislation more acceptable.

For instance, drafts prepared under Kovács would have set a minimum tax rate of €10 per tonne of CO2 emitted, but this would not apply in the new proposal, the spokesperson said. The Commission services are now revising the impact assessment for the revamped directive in order to determine the appropriate levels, she added.

A growing number of member states are introducing carbon taxes, joining Nordic countries Sweden, Finland and Denmark, which have been applying them since the early 1990s. In France, President Nicolas Sarkozy is battling to get national legislation through constitutional hurdles.

Consequently, the UK, the most vocal opponent to EU-mandated environmental taxes, is looking increasingly isolated. Šemeta’s proposals would, however, require the unanimous endorsement of all member states.

EurActiv 9 March 2010