Energy taxation in the EU Wien September 2003

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Energy taxation in the EUWienSeptember 2003

Daniel BoeshertzEuropean CommissionDG TAXUD
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Todays discussion

• General policy context
• Present Community legislation
• The energy tax directive content and state of
  play

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Taxation general context

• The main purpose of taxation is to raise revenues
• EC tax legislation unanimity of the Council
  (Article 93 EC)
• Integration of sustainable development in
  Community policies

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Main drivers in energy taxation

• Good functioning of the Internal market
• Sustainable development

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Taxation of energy products current legislation

• Two directives on mineral oils (1992)
• harmonisation of the structures of excise duties
• approximation of rates (minimum rates for product
  / use)
• compulsory exemptions, facultative tax
  reductions, flexible tool for tax differentiation
• Introduced for internal market reason

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The energy tax directive main lines

• Community framework for the restructuring of the
  taxation of energy products
• All energy sources are concerned (except for
  peat)
• Increase in existing minimum rates (mineral oils)
  and new positive minimum rates for electricity,
  gas and coal
• Few compulsory exemptions (international
  aviation)

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The energy tax directive main lines (2)

• Facultative tax differentiation measures for
  household consumption, renewables, energy
  intensive companies
• Possibility of further tax differentiation -
  similar to Art 8(4) derogations
• Specific rules for electricity, natural gas and
  coal (vs. Directive 92/12)

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Competitiveness issues in the compromise

• Business / non business
• Processes outside the scope of the Directive
• Energy intensive companies (EIC) (purchases of
  energy products and electricity amounts to at
  least 3.0 of the production value, or national
  energy tax payable amounts to at least 0.5 of
  the added value)
• Voluntary agreements EIC 0 rate - non EIC
  50 min rates
• Consistency with State aid rules

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Business use?
Rate A
yes
no
Rate B
Energy- intensive?
yes
no
Environmental agreement or eq. art. 17 (4) ?
Environmental agreement or eq. art. 17 (1) (b) ?
yes
no
Environmental agreement or eq. art. 17 (4) ?
yes
no
yes
no
Reduced rate (down to zero) art. 17 (2)
Reduced rate (down to min.rate) art. 17 (1)
Normal business rate
Reduced rate (down to 50 of min.rate) art. 17 (3)
Reduced rate (down to min. rate) art. 17 (1)
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The energy tax directive state of play

• Opinion of the EP is required
• Transposition is to be prepared at national level
• Entry into force 1 January 2004
• Future Member States transition periods, if
  necessary, to be discussed

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Conclusion

• Commissions policy in indirect taxation more
  harmonisation
• Action is required at EU level (avoid
  fragmentation, competitiveness...)
• The global compromise reached on energy tax is
  positive
• (nearly) all energy products are taxed minimum
  rates are increased or set
• tax differentiation measures/transition periods
  give appropriate flexibility
• Unanimity?