No C 237/34 Official Journal of the European Communities 12. 9. 88 
suggested that either banderoles or a system of linked 
bonded warehouses could be the method of collection 
and control and appears to favour the latter. But there 
is no proposal currently on the table which would 
provide the basis for a judgement on the appropriate­
ness of one or another set of rates. On the other 
hand the health policy of the Community has produced 
proposals for labelling which would be language (and 
thus in party country) specific. In view of the lack 
of firm proposals on the methods of assessment and 
collection and in view of the lack of evidence from the 
Commission on the effects of their proposals on the 
structure of the tobacco industry, on employment in 
that industry, on agriculture and on Government 
budgets and personal expenditure, the Committee is 
unable to come to a firm opinion on the proposals now 
before it. The present set of proposals merely deal with 
the basic structure and rates of tobacco excise duties. 
But unless the method of assessment and collection is 
Done at Brussels, 7 July 1988. 
1. General comments 
1.1. The Commission's proposal for the harmoniza­
tion of rates of excise duty on mineral oils is part of 
the overall plan for the harmonization of indirect taxes, 
the removal of tax frontiers and the setting-up of the 
internal market. Removal of tax frontiers will require known it is not possible to comment definitively on 
proposals for rates. In the case of excise duties we seem 
to have the cart put to us before the horse. Until we 
know which methods of tobacco excise tax collection 
and control are proposed for the internal market then 
we cannot form a definite opinion on whether the 
correct structure and mix of structures is selected and 
whether the rates are appropriate. In particular we 
cannot give an opinion on whether the rates must be 
completely approximated or whether there is room for 
greater flexibility than is proposed by the Commission. 
Since all the revenue from tobacco excise duties belongs 
to the Member States there should be as much flexibility 
as is consonant with the requirements and the proper 
operation of the internal market. The converse of this 
statement is that there should be only that degree of 
harmonization of excise duties which is necessary to 
the operation of the internal market. 
The Chairman 
of the Economic and Social Committee 
Alfons MARGOT 
the approximation not only of turnover taxes but also 
of special excise duties. The aims of the Commission's 
proposal are therefore welcomed. But the practical 
achievement of this objective raises problems which the 
proposal for a Directive fails to solve or which could 
be solved differently. 
2. Specific comments Opinion on the proposal for a Council Directive on the approximation of the rates of excise 
duty on mineral oils (J) 
(88/C 237/11) 
On 11 September 1987 the Council decided to consult the Economic and Social Committee, 
under Article 198 of the Treaty establishing the European Economic Community, on the 
abovementioned matter. 
The Section for Economic, Financial and Monetary Questions, which was responsible for 
preparing the Committee's work on the subject, adopted its Opinion on 21 June 1988. The 
rapporteur was Mr Broicher. 
At its 257th plenary session (meeting of 7 July 1988) the Economic and Social Committee 
adopted the following Opinion with no dissenting votes and four abstentions. 
(!) OJ No C 262, 1. 10. 1987, p. 8. 2.1.1. The Commission is proposing rates of duty 
which, if adopted, would lead to a higher overall burden 
12. 9. 88 Official Journal of the European Communities No C 237/35 
of taxation on mineral oil products in the EC. Rather 
than levying excise duty at the top rate, it would seem 
more appropriate to harmonize down to the lowest 
possible level in the light of the budgetary situations of 
the Member States. Products subject to mineral oil 
excise duty are generally used as inputs for other prod­
ucts or services. Increased costs attributable to mineral 
oil duty would therefore affect prices across the board. 
In this sense mineral oil duty is different from other 
types of excise duty which are generally levied directly 
on the consumer good. 
2.1.2. It is to be regretted that the Commission has 
moved away from the approach adopted in the proposal 
for a Directive on the harmonization of excise duties 
on mineral oils of 1 August 1973 (*), where it envisaged 
a progressive reduction in the taxation of fuel oils prior 
to harmonization of indirect taxation. The Commission 
also pointed out in this document that this tax is a tax 
on consumption and not a tax on production, which is 
liable to increase industrial production costs. 
2.1.3. There might in particular be a case for abolish­
ing all excise duties on heavy fuel oil used purely 
for production; apart from representing a burden on 
Community companies," this excise duty also distorts 
competition between the various energy sources. 
2.2. The adoption of an arithmetic average rate for 
petrol is not considered appropriate. A weighted aver­
age would reflect existing taxation systems more accu­
rately. The proposed lower rate of duty on unleaded 
petrol is particularly welcomed as a contribution to 
protection of the environment. 
2.3. In some cases—e.g. heating oil—mineral oil 
excise duty is levied directly on a consumer product. 
An increase in the rate of tax would, inter alia, affect 
domestic heating costs. This raises the question as to 
whether it is defensible to tax heating oil alone or 
whether all heating sources should not be treated 
equally. It is contradictory to say, on the one hand, 
that heating oil should be treated with circumspection 
in view of competition from other energy sources, and, 
on the other, for certain countries to increase excise 
duties on heating oil by some 38% of the pre-VAT 
price. 
(*) OJ No C 92, 31. 10. 1973. 
Done at Brussels, 7 July 1988. 2.4. In proposing that the same rate be applied to 
every product, the Commission's approach to excise 
duties on mineral oil is different from that adopted for 
VAT. The rates of special excise duty certainly need to 
be more uniform. Excise duties are levied as taxes 
on production to facilitate monitoring. Any disparities 
cannot be ironed out during the subsequent stages of 
the marketing process. The result is that lightly taxed 
products will be available for sale alongside more 
heavily taxed products. This can give rise to distortions 
of competition. 
2.5. The Commission proposal makes no mention 
of tax advantages for certain economic sectors or 
specific uses, as currently practised in the Member 
States. Such tax advantages should continue in existence 
and be harmonized and particular attention should be 
paid to opportunities for tax evasion. 
2.6. The harmonization of mineral oil excise duties 
will have a particular impact on road haulage and to a 
limited extent also on passenger transport. Whilst it is 
true that a lower rate of taxation on road diesel will, 
in those Member States where the tax reduction is 
actually put into effect, benefit these sectors, in view of 
the forthcoming harmonization of transport policy the 
taxation of vehicle fuel should not be dealt with in 
isolation. It is also necessary that road tax and similar 
charges, e.g. road tolls, be regarded as part of a single 
package and harmonized together. 
2.7. Neither the Commission proposal nor the Com­
mission document on the introduction of a clearing 
mechanism specifies the method by which—as under 
the VAT clearing procedure—excise duties are to be 
channelled to those states where consumption actually 
occurs. No definitive view can be expressed on this 
proposal, or on any other proposal for the approxi­
mation of rates of excise duty, until the details of this 
procedure are made known. If for example, as suggested 
in the global Commission communication on the har­
monization of indirect taxes, the intention is to set up 
tax depots through which all taxable goods must pass 
when entering another Member State, this would 
amount to the retention of tax frontiers. And this would 
radically alter the views expressed on the excise duty 
proposals. The Commission should therefore submit its 
proposals with regard to the method of distribution 
without delay. 
The Chairman 
of the Economic and Social Committee 
Alfons MARGOT