Proposal for a COUNCIL DECISION authorising Ireland to apply a differentiated rate of excise duty to low-sulphur diesel in accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Submission of request

In a letter dated 13 June 2001, supplemented by further information sent on 1 August, Ireland informed the Commission that it wanted to introduce a differentiated rate of excise duty on diesel fuel with a sulphur content not exceeding 50 particles per million (ppm) under Article 8(4) of Council Directive 92/81/EEC on the harmonisation of the structures of excise duties on mineral oils. [1]

[1] OJ L 316, 31.10.1992, p. 12, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

Ireland explained that the purpose of the proposed reduction is to protect the environment and, in particular, to improve air quality.

It wished to reduce excise duties by IEP 0,06 per litre for diesel containing less than 50 ppm sulphur. This reduction would be accorded to all users of 50 ppm diesel.

The measure, as provided for in Section 155 of the "Finance Act, 2001", will enter into force upon authorisation by the Council and terminate on 31 December 2004. The estimated budget cost is IEP 123,5 million per year.

The Irish authorities do not consider that this measure constitutes a State aid since it will be accorded to all consumers, without discrimination.

2. the Commission's assessment

Under Article 8(4) of Directive 92/81/EEC, the Council, acting unanimously on a proposal from the Commission, may authorise any Member State to introduce exemptions from, or reductions in, excise duties on grounds of specific policy considerations.

In letters of 13 June and 1 August 2001 Ireland requested authorisation to apply a differentiated rate of excise duty to low-sulphur (50 ppm) diesel until 31 December 2004. The measure will not enter into force until authorised by the Council.

In accordance with Directive 92/81/EEC, the other Member States have been informed of this request.

Following the implementation of the planned measure, the differentiated excise duties charged on diesel in Ireland will be as follows:

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The reduced excise duty would thus comply with the Community minimum laid down in Article 5 of Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils. [2]

[2] OJ L 316, 31.10.1992, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

Following a thorough study of the measure and acknowledging the importance of tax incentives to promote cleaner fuels, the Commission notes that the reduction of excise will be of general application, in other words the reduced rate will be available to anyone filling up with low-sulphur diesel in Ireland.

The measure is sought on environmental grounds - the benefits in terms of air quality are known.

The Commission notes that this measure is for a finite period. It expires on 31 December 2004, the day before use of this type of fuel becomes mandatory under Directive 98/70/EC of the European Parliament and of the Council of 13 October 1998 relating to the quality of petrol and diesel fuels. [3]

[3] OJ L 350, 28.12.1998, p. 58, Directive amending Council Directive 93/12/EEC (OJ L 74, 27.3.1993, p. 81).

The Commission notes that on 12 March 2001 the Council allowed the Netherlands to apply a reduced rate of excise duty on 50 ppm diesel fuel. [4] The Council has also authorised aderogation under Directive 92/81/EEC for 50 ppm fuels in Germany [5] and in Belgium. [6]

[4] Council Decision 2001/229/EC of 12.3.2001 (OJ L 84 of 23.3.2001).

[5] Decision 2000/283/EC of 10.4.2000 authorises Germany, to apply a differentiated rate of excise duty from 1.11.2001 to 31.12.2002 on fuels with a maximum sulphur content of 50 ppm on condition that it complies with the requirements laid down in Council Directive 92/82/EEC of 19.10.1992 on the approximation of the rates of excise duties on mineral oils, and in particular the minimum rates laid down in Articles 4 and 5 thereof.

[6] Council Decision 2001/439/EC of 5.6.2001 (OJ L 155, 12.6.2001).

3. DECISION

In accordance with Article 8(4) of Council Directive 92/81/EEC, the Commission proposes that the Council authorise Ireland to apply a differentiated rate of excise duty of a maximum of EUR 0,076 (IEP 0,06) per litre on low-sulphur (50 ppm) diesel fuel until 31 December 2004.

The reduced excise duty must comply with the requirements of Council Directive 92/82/EEC and in particular the minimum rate laid down in Article 5.

Proposal for a COUNCIL DECISION authorising Ireland to apply a differentiated rate of excise duty to low-sulphur diesel in accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC

(only the English version is authentic)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils, [7] and in particular Article 8(4) thereof,

[7] OJ L 316, 31.10.1992, p. 12, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

Having regard to the proposal from the Commission,

Whereas:

(1) Under Article 8(4) of Directive 92/81/EEC, the Council, acting unanimously on a proposal from the Commission, may authorise any Member State to introduce exemptions or reductions in the excise duty charged on mineral oils for specific policy considerations.

(2) Ireland has requested authorisation to introduce a differentiated rate of excise duty on low-sulphur (50 ppm) diesel. The differentiation, provided for in Section 155 of the "Finance Act, 2001", is of EUR 0,076 (IEP 0,06) per litre. This would mean that the value of the differentiated excise duties imposed on diesel in Ireland would be EUR 325,2 (IEP 256,1) on 1000 litres of conventional diesel and EUR 249,0 (IEP 196,1) on 100 litres of 50 ppm diesel.

(3) The Irish measure would thus comply with the Community minimum rate of excise duty of EUR 245 per 1000 litres laid down in Article 5 of Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils. [8]

[8] OJ L 316, 31.10.1992, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

(4) This differentiation would be accorded to all consumers of 50 ppm diesel in Ireland.

(5) Low-sulphur diesel complies with the environmental criterion (50 ppm) laid down in Directive 98/70/EC of the European Parliament and of the Council of 13 October 1998 relating to the quality of petrol and diesel fuels. [9] Under Article 4 of that Directive, the use of 50 ppm diesel will be compulsory from 1 January 2005.

[9] OJ L 350, 28.12.1998, p. 58, Directive amending Council Directive 93/12/EEC (OJ L 74, 27.3.1993, p. 81).

(6) The measure is sought on environmental grounds - the benefits in terms of air quality are known.

(7) The other Member States have been informed of this request by the Irish authorities.

(8) On the information available at present, neither the Commission nor the Member States consider that the application of a differentiated rate of excise duty on low-sulphur fuel will cause distortions of competition affecting the common interest or hinder the operation of the single market.

(9) This Decision does not prejudice the outcome of any future state aid procedures that may be undertaken in accordance with Articles 87 and 88 of the Treaty, nor does it override the requirement for Member States to notify instances of potential state aid to the Commission under Article 88 of the Treaty.

(10) The Commission regularly reviews reductions and exemptions to check that they do not distort competition or the operation of the internal market, and that they are not incompatible with Community environmental policy.

(11) The Council will review this decision on the basis of a proposal from the Commission no later than 31 December 2004, when the authorisation granted by this decision expires,

HAS ADOPTED THIS DECISION:

Article 1

1. In accordance with Article 8(4) of Council Directive 92/81/EEC, Ireland is authorised to apply a differentiated rate of excise duty on low-sulphur (50 ppm) diesel fuel from 1 October 2001.

2. This reduction in excise duty, not exceeding EUR 0,076 (IEP 0,06) per litre of fuel, must comply with the terms of Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils, [10] and in particular the minimum rate laid down in Article 5 thereof.

[10] OJ L 316, 31.10.1982, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

Article 2

The differentiated rate must be accorded to all users of 50 ppm diesel purchased in Ireland, without discrimination.

Article 3

Subject to a prior review by the Council, on the basis of a proposal from the Commission, this authorisation shall expire on 31 December 2004.

Article 4

This Decision is addressed to Ireland.

Done at Brussels,

For the Council

The President