COMMISSION OF THE EUROPEAN COMMUNITIES 
C0MC91) 43 final 
Brussels, 19 February 1991 
Proposal for a 
COUNCIL DIRECTIVE 
fixing certain rates and target rates of 
excise duty on mineral oils 
(presented by the Commission) 
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EXPLANATORY MEMORANDUM 
INTRODUCTION 
1. The aim of this proposal is to complete and amend the 
Ie' P.9 proposal on the approximation of oxcif,.? duties i>: 
mineral oils, so as to have in place as soon as possible 
those measures essential for creating the internal market ir 
this area and, in particular for the abolition of fiscal 
frontiers. 
In the ' context of this objective, the proposai takes 
particular account of the aims of two other areas of 
Community policy - those of transport and of the 
environment. In the latter instance, the proposal reflects 
the line adopted by the Dublin European Council of 25 and 26 
June 3 990 on taking account of environmental concerns \r 
o ( ; o no m i c a n d I. i s c a 1 m c a su res. 
2. It is important to set the context which this proper.a! 
i^as within the work of the Council. 
Negotiations on excise rates must be resolved within the 
Council by the end of 1991. For diesel in particular, the 
European Council has given a mandate to the Council to reach 
ng !"<••binent" before 30 June 199.1. 
This text there tore forms an urgent element in the conri-xt 
of decisive progress in negotiations at Council level on 
e x ci^'.e r ci t e s . 
3. This proposal is in conformity with Community energy-
policy which particularly seeks to achieve stability in the 
energy market, to reinforce the security of the Community's 
supply and to encourage the development of more economic 
sources of energy. 
4. Finally, this proposal, which ciims at abolishing fiscal 
frontiers, forms part of the stance taken by the Commission 
in setting down an overall strategy in the field of energy 
and environment, in particular in combating the greenhouse 
effect. 
This proposal, incorporating a signal in favour of 
environmental protection, is therefore not exclusive, but 
complements other initiatives taken and to be taken by the 
Commission in the area of reducing the greenhouse effect. 
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1. OUTLINE OF THE APPROACH 
1.1 In its proposal on the approximation of the rates of 
excise duty on mineral oils made in 1989(1) the Commission 
has put forward for petrol, a system which includes a 
minimum rate and a target rate, the characteristics of which 
are the following: 
- the minimum rate of excise duty must be implemented by 
each Member State as from 1 January 1993; 
- the target rate represents the common level towards which 
Member States must progressively converge. 
In the case of diesel, because of its different nature 
(mainly commercial usage and purchased by end-users in 
larger quantities), Member States would be obliged to bring 
their rates into conformity with a relatively restricted 
rate band. This would be binding on the Member States from 1 
January 1993. 
1.2 In the above-mentioned proposal the minimum rate for 
leaded petrol was fixed at 337 ecu per 1000 litres. The 
minimum rate for unleaded petrol was fixed 50 ecu lower than 
the rate applicable to leaded petrol, i.e. 287 ecu per 
1000 litres. 
1.3 The target rates for petrol were not determined at the 
time, so that account might be taken of the requirements of 
specific policies such as transport, energy, and 
environment. The Commission gave a commitment to making a 
proposal on target rates for petrol before 31 December 1990. 
The object of the present proposal is to complete- the 
abovementioned proposal by setting up target rates of excise 
duty for petrol. 
1.4 The 1989 proposal further provides that the level of the 
different rates will be subject to reexamination every two 
years, taking particular account ol the policy 
considerations set out in para. 1.3. In the light of the 
recent developments in these fields, especially environment 
and transport, the Commission is availing of the current 
proposal to update the rate band for diesel. 
(1) C0MC89) 526. 
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This is particularly apposite in the light of the request 
from the recent Rome European Council which seeks that the 
Council should reach a decision on the harmonization of the 
various impositions on commercial road transport (excise 
duty on diesel, annual circulation taxes and road tolls) by 
30 June 1991. 
2. THE TARGET RATE OF EXCISE DUTY ON PETROL - LEADED AND 
UNLEADED 
2.1 Rates currently in force. 
The graphs in annexes la and lb show the rates of excise 
duty in force on 1 September 1990 on leaded and unleaded 
petrol in the Member States. 
2.2 Importance of the excise duty on petrol 
Of these mineral oils, the most significant is petrol, 
accounting roughly 60% of the excise duties on mineral oils 
and almost 4 0% of all excise revenue in the Community. Its 
use is almost entirely for personal private transport. 
2.3 The establishment of a target rate for petrol must take 
account of the updating of the former values, of the 
environmental aspects, and of the case of unleaded petrol. 
2.4 Basis for the target rate 
In 1987, the common rate of excise duty proposed for leaded 
petrol was 340 ecu per 1000 litres*2). In 1989, the 
Commission proposed a minimum rate for petrol of 337 ecu per 
1000 litres. Such a proposal is consistent with a target 
rate of 450 ecu, especially when taking into account the 
need to maintain the real value of the figure. 
2.5 Taking account of the problem of CO., emissions. 
Consideration of the problem of C02 emissions is an 
important point given the commitment of the Community in the 
context of the 2nd World Climate Conference in Geneva to 
stabilize C02 emissions at their current level by the end of 
the century. 
A first step in this direction will be to take account of 
these considerations in calculciting the target rate of 
excise duty on petrol. 
(2) COM(87) 327. 
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Indeed, it must be acknowledged that a significant part of 
polluting emissions of carbon dioxide (C02) comes from the 
use of petrol for personal private transport. 
The target rate for petrol should be fixed at a levai 
sufficient to raise the consumer's consciousness about C02 
pollution and its implications for the environment and in 
particular the greenhouse effect. 
The present proposal is therefore based on the principle 
that the excise rate for petrol should include a supplement 
for C02 content. This supplement has been fixed at 4 5 ecu 
per 1000 litres of petrol which corresponds to a level of 65 
ecu per tonne of carbon. 
Accordingly, the long term target rate of excise duty for 
leaded petrol shall be 495 ecu (i.e. 450 plus 45) per 1000 
litres. 
2.6 The case of unleaded petrol 
In the case of unleaded petrol, a differential of 50 ecu per 
1000 litres below the minimum rate for leaded petrol was 
specified in the above-mentioned proposal of 1989. This 
gives an effective minimum rate of 287 ecu per 1000 litres. 
At 1 January 1991, the differential between the rate applied 
to unleaded petrol and leaded was as follows: 
BE DK DE EL ES FR IE IT LU NL PT UK 
3 5 0 2 3 4 66 3 8 52 3 4 4 1 2 4 2 0 66 4 2 
(ecu per 1000 .1 i Ire:;) 
The level and nature of the differential in favour of 
unleaded petrol must be considered. 
It is useful recalling the background to introduction ** of 
this practice in the mid 80s. It was intended to offset some 
element of the incremental costs involved in refining and 
distributing of what was then a new product. 
There was also some element of tax-generated price reduction 
to encourage the conversion process among consumers. The 
fact that the rate of conversion has been highest in those 
Member States where the differential has been greatest has 
corroborated the correctness of the policy. 
It has already been pointed out in the 1989 proposal that as 
the market share of unleaded petrol increases, the extra 
costs referred to above will decrease. It therefore follows 
that the element of cost compensation should be gradually 
reduced as the need for it disappears. However, since the 
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rate of change to unleaded is not constant across th 
Community, it is, at this stage, difficult to take 
definitive position. For this reason the differential fo 
the target rate of unleaded petrol is being retained for th 
moment at 50 ecu per 1000 litres, which is the same level a 
proposed for the minimum rate in the above-mentione 
proposal of 1989. 
Accordingly, the target rate for excise duty on unleade 
petrol is set 50 ecu below the target rate for leade 
petrol, i.e. 445 ecu (495 minus 50 ecu). 
3. AMENDING THE BAND OF EXCISE DUTY RATES PRESCRIBED FO 
ROAD DIESEL 
3.1 The rates currently in force 
The rates of excise duty in force in the Member States on 
September 1990 can be seen in the graph in annex 2. 
3.2 Transport policy considerations 
Discussions on the need for approximation of the variou 
charges on commercial road transport (diesel excises, annua 
circulation taxes and road toll:;) arc now at an advance 
stage. The deadline of 30 June 1991 set by the Europea 
Council of Rome (14 and 15 December 1990) for reaching 
decision on these matters adds urgency. There is i 
addition, general acceptance that the diesel excise rat 
should be increased in order to allow a better coverage o 
the infrastructure costs. It is therefore appropriate tha 
the Commission should address this point in its curren 
proposal. 
3 . 3 C02 content 
The arguments set out above for a supplement in respect c 
the C02 content of petrol apply equally to the othe 
principal road fuel, which is diesel. Not to so do woul 
simply encourage long term substitution by private motorist 
and thus defeat the aim of the move which is to stabiliz 
C02 emissions at the current level by the year 2000. 
Accordingly, the excise rate band on diesel proposed her 
should be fixed at a level high enough to take account o 
the problems of C02 emissions. 
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3.5 Widening of the band 
As an initial step in the phase of approximation, it is 
proposed to increase the width of the band rate from 10 to 
25 ecu, to facilitate the process of adjustment. At the same 
time, the final goal of a uniform common rate for diesel 
remains as was the case in the 1989 proposal. 
3.5 Composition of the rate 
Accordingly the band rate proposed for diesel is from 245 
ecu to 270 ecu. 
4. OTHER MINERAL OILS 
4.1 Kerosene 
As was stated in the 1989 proposal, kerosene should be 
treated according to its use. When used as a propellant, the 
charge should be the same as for petrol. 
The 1989 proposal put forward a minimum rate on kerosene 
when used as a propellant of 337 ecu per 1000 litres. 
Accordingly, the target rate proposed for kerosene used as a 
propellant is 495 ecu per 1000 litres. 
4.2 Other mineral oil products 
The present proposal concerns only those mineral oils used 
mainly as propellants - i.e., petrol and diesel. Together 
they account for over 90% of the excise revenue generated 
from mineral oils within the Community. 
Besides, these other products were covered by the 1989 
proposal and the marginal significance of their use as 
propellants would not justify modifying the 1989 proposal at 
this point. 
Accordingly the treatment of these other oil products would 
go beyond the scope of the current proposal and for this 
reason the questions raised are not addressed here. 
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Proposal for a 
COUNCIL DIRECTIVE 
fixing certain rates and target rates of 
excise duty on mineral oils 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the Europea 
Economic Community, and in particular Article 99 thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European Parliament, 
Having regard to the opinion of the Economic and Socie 
Committee, 
Whereas Council Directive ,<1> iai 
down a minimum rate of excise duty on petrol thi 
instituting a process of convergence; whereas to complete thi 
process it is necessary to fix a target rate of duty towarc 
which Member States will converge; 
Whereas the said Directive provides for a periodic revie 
of the various rates of duty and it is now appropria 
that the rate band for diesel be reconsidered, 
HAS ADOPTED THIS DIRECTIVE: 
(1) OJ No C 16, 23.1.1990, p. 10. 
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ARTICLE 1 
&:::• &v..• v«; A»..:£raM^fcjDfon«ary^ 19S3, jfche.?.-- target. rafce^j&f~.:excise^ufcy^^sp: 
.^jtafigiKbe£^ -Meafoer '. Strates ^siïa'lfï^vmâkè^^thfei*^^ 
Wtes &:convetge>^ sha 11 •.- be ECOi495 per 1000 lit r?es >. ï .^- ^%uv^.,^r^ ;.;• K ; 
ARTICLE 2 
As from 1 January 1993, the target rate of excise duty on 
unleaded petrol, shall be ECU 50 lower than the target rate 
applicable to leaded petrol as defined in Article l. 
ARTICLE 3 
As from 1 January 1993, the rate of excise duty on diesel 
shall be not less than ECU 245 or more than ECU 270 per 1000 
litres. 
ARTICLE 4 
As from 1 January 1993, the target rate of excise duty on kerosene 
intended for use as a propellant shall be ECU 495 per 1000 
litres. 
ARTICLE 5 
Member States shall bring into force the laws, regulations 
and administrative provisions necessary to comply with this 
Directive not later than 31 December 1992. 
When Member States adopt these provisions, these shall contain a 
reference to this Directive or shall be accompanied by such 
reference at the time of their official publication. The procedure 
for such reference shall be adopted by Member States. 
ARTICLE 6 
This Directive is addressed to the Member States. 
Done at Brussels, For the Council 
The President 
Annex 1a LEADED PETROL EXCISE RATE 
Comparison of national rates since 1987 
ecu per 1000 litres 
BE DE EL IT NL ES 
DK FR IE LU GB 
Proposed target rate of 495 ecu 
Minimum rate 337 ecu 
01.04.87 M 01.09.89 01.09.90 PT 
21.01.91 O 
I 
Annex 1b UNLEADED PETROL EXCISES 
Comparision of national rates since 1987 
Per 1000 litres 
700 
BE DE EL IT NL 
DK FR IE LU GB 
Proposed target rate of 445 ecu 
Minimum rate 287 ecu 
01.04.87 fM 01.09.89 CZl 01.09.90 1111 PT 
21.01.91 
I rates expressed in current ecu 
Annex 2 DIESEL EXCISE RATES 
Comparison of national rates since 1987 
400 ecu per 1000 litres 
300 H 
200 
100 
0 
BE DE EL IT NL ES 
DK FR IE LU GB 
Proposed rate band from 245 - 270 ecu PT I 
01.04.87 1 01.09.89 01.09.90 21.01.91 
PRICE