WRITTEN QUESTION E-0101/98 by Jannis Sakellariou (PSE) to the Commission (30 January 1998)

Subject: Mineral oil tax on aircraft fuel

In its report on the review of the mandatory exemption under Directive 92/81/EEC (COM(96) 0549), the Commission states that in view of the environmental impact of aviation activities the mandatory exemption applied to mineral oils used in aviation should be abolished.

1. When will the Commission follow up the above conclusion and abolish this exemption from mineral oil tax throughout the European Union?

2. Does the Commission take the view that the uniform introduction of the mineral oil tax on aircraft fuel in all 15 Member States will forestall the risk of distortions of competition which would arise in the case of independent national action?

3. Does the Commission know whether the unilateral abolition, by the European Union, of the exemption from mineral oil tax would create disadvantages for airlines and charter companies in the EU Member States vis-à-vis those in other countries, and if so what disadvantages and in what form?

4. Has the Commission considered whether this environmentally beneficial tax might even be used as an additional source of revenue for the EU budget and thus enable the Member States' budget contributions to be reduced?

5. If the Commission does not intend to follow up the conclusion it reached in its report on this matter, what are its reasons?

Answer given by Mr Monti on behalf of the Commission (12 March 1998)

1. and 5. In the report cited by the Honourable Member, the Commission concludes that excise duties on mineral oil should be extended to aviation kerosene 'as soon as the international legal situation allows'. This conclusion is reflected in the Commission proposal for a Council directive restructuring the Community framework for the taxation of energy products ((OJ C 139, 6.4.1997. )). In line with its conclusions in the report, however, the Commission also proposed that Member States should, pending a change in international arrangements, have the option to tax aviation fuel used on national commercial flights and also, by bilateral agreement, fuel used on flights to another Member State or to a third country.

2. The Commission agrees that a harmonised approach is necessary in this area in order to prevent distortion of competition. That is why it has proposed the maintenance, for the time being, of an exemption for aircraft fuel. However, it recognises that individual Member States may wish to take unilateral action in view of the environmental impact of air transport and has accordingly proposed the abolition of the existing obligatory exemption rules.

3. As set out in its report, the Commission considers that unilateral action by the Community would put Community carriers at a competitive disadvantage. The Council, in response to the Commission's report has adopted a Resolution requesting the Commission to provide further information on all aspects of the introduction of taxation of aircraft fuel. To meet this request, the Commission has launched a study to examine the various effects of the introduction of taxation within the Community. The consortium carrying out this study is due to produce its final report during the summer of 1998.

4. With the exception of customs duties, indirect tax revenues have traditionally been retained by individual Member States and any proposal to divert revenues from aviation fuel taxation into Community own resources would require the unanimous agreement of all Member States. This is unlikely to be forthcoming.