WRITTEN QUESTION E-2261/01

by Piia-Noora Kauppi (PPE-DE) to the Commission

(31 July 2001)

Subject: Harmonisation of energy taxation proposed in the Green Paper on Security of Energy Supply

The Commission's Green Paper entitled Towards a European strategy for the security of energy supply(1) represents a significant strategic gambit in the debate on the development of energy supply in the coming years and decades. It follows in detail developments in the energy field from the point of view of energy sufficiency, of access to energy supplies and of the environment. It also discusses the development of energy taxation together with its fiscal objectives and its effects on regulating behaviour.

The Green Paper shows how much tax was paid on energy production and transport costs in 1997. According to my information, energy taxation has risen since 1997, especially in Finland.

According to the Green Paper, energy taxation is an effective tool for regulating energy use. For this reason it is proposed that a sufficiently high level of taxation should be adopted in the energy sector. But what is sufficiently high and what does it mean in practice? The harmonisation of Community taxation is regarded as an essential instrument from the point of view of competition, to prevent distortions in the energy sector.

1. How can the proposed harmonisation of energy taxation be used to ensure that the northern Member States are not forced into a less favourable position with regard to energy taxation?

2. How can the renewal of industry and energy production and the development potential essential for the environment be achieved when increasing taxation weakens competitiveness?

3. How can the competitiveness of EU industry be protected in relation to third countries?

(1) COM(2000) 769.

Answer given by Mr Solbes Mira on behalf of the Commission

(22 October 2001)

In 1997 the Commission proposed a Council Directive restructuring the Community framework for the taxation of energy products(1). The proposed Directive would lay down the rates of excise duty applicable to energy products, to be increased in three stages.

The aims of the proposed Directive are to:

- limit distortions of competition between Member States and between energy products in order to improve the operation of the internal market and increase the margin of manoeuvre for States carrying out certain desirable tax reforms, and

- contribute effectively to the reduction of pollutant emissions and greenhouse gases in the context of the Kyoto Protocol by harmonising the structures and approximating the rates of duties applicable to all energy products.

The proposed Directive would also improve the security of the Community's energy supply, particularly through the possibilities it provides for guiding the selection of energy products consumed and through its impact on overall demand.

The proposed Directive, which clearly fits in with the sustainable development strategy initiated by the Commission, would benefit all the Member States.

The statistics on energy costs (including taxes) show that companies with high energy consumption in the northern Member States do not bear a heavier burden than companies in the other Member States. The harmonisation of structures and approximation of excise duties leads to a better distribution of energy costs among economic operators in the Member States.

The 1997 proposal for a Directive and current discussions at the Ecofin Council fully take on board concerns about the competitiveness of European businesses, envisaging as they do compulsory exemptions or optional reductions for businesses with high energy consumption. Community rules on State aid have also been adapted to take fuller account of the need to maintain industrial competitiveness at the same time as protecting the environment.

Lastly, the Commission would point out that a green tax reform such as the one put forward in the 1997 proposal for a Directive, i.e. one that observes the principle of budget neutrality, could bear double dividends by both combating pollutants more effectively and promoting job creation and growth in the Member States.

(1) OJ C 139, 6.5.1997.