The European Union is drawing up plans for its first direct tax with a “green” levy on petrol, coal and natural gas that could cost British consumers up to £3 billion. Proposals expected to be announced next month would give the EU its first funding which would not come from national governments.
Algirdas Semeta, the new European commissioner for taxation, is planning a “minimum rate of tax on carbon” across the whole EU as a “priority”.
“In my estimation it is possible to start discussions,” he told European Voice, a weekly Brussels newspaper. “There is currently the right momentum.”
A similar proposal was considered so controversial that it was shelved without discussion five years ago.
The plan to push for more financial independence from national governments comes as the EU attempts to build a more powerful position in the world.
Following the new Lisbon Treaty, the EU now has an expensive array of new institutions including a new President of Europe and a foreign minister with her own diplomatic service.
Hervé Jouanjean, Director General of the European Commission’s Budget department, recently told a Brussels audience that the EU was “very close to paralysis” because of the reluctance of stretched national treasuries to give it funding.
“We should have a mechanism which would serve to exploit the possibility, in a progressive way, to lead to direct funding of the EU,” he said.
Herman Van Rompuy, the new EU president, has already thrown his weight behind the idea of new taxes.
The new tax would lead to direct rises in petrol and energy bills and additional price increases due to higher costs for industry.
Open Europe, the think-tank, has calculated, on the basis of the shelved 2005 proposal that set a £9 levy on a tonne of CO2, that the cost of the new tax to British businesses and consumers would be £3.2 billion. The final cost could be even greater if electricity, generated from natural gas, was included in the levy.
Mats Persson, director of Open Europe, warned that “a single EU levy is an unnecessarily inflexible tool” that takes no account of existing national taxes or measures to cut climate change.
“A single flat rate will disproportionately hit poorer consumers who spend a larger share of their income on energy and fuel bills,” he said. “It will also impose a disproportionate burden on small businesses, which are vital for economic recovery and growth. The EU needs a more flexible and proportionate approach to cutting carbon emissions.”