WRITTEN QUESTION E-1315/03

by Bernard Poignant (PSE) to the Commission

(7 April 2003)

Subject: French regions and variations in the rate of domestic duty on petroleum products

The French Republic is a unitary state. The President of the Republic and the Government, together with Parliament when it comes to voting on legislation, exercised all state powers. Public legal bodies existing within the French state (regions, departments, local authorities, public undertakings for intercommunal cooperation, etc.) enjoy jurisdiction based on the ratione materiae, established by central government, laws and regulations.

For some years now, France has been seeking to decentralise power to the regional authorities. The French Government has put forward various proposals, including the possibility of allowing the regions to determine the domestic duty on petroleum products (TIPP).

The Prime Minister, Jean-Pierre Raffarin, stated in a speech on this issue that:

() We will fund the transfer of powers by transferring taxation, and not by grants.

() We will assign part of the national domestic duty on petroleum products (TIPP) to the departments and regions.

() We will give the regions the option of varying the regional TIPP rate, as soon as we have resolved the legal problems with the European Union; but we will get there, since this has already been done in various Member States ().

In respect of European legislation, do regions actually have the right to adjust the rate of this duty? Do those Member States whose decentralisation is far more advanced transfer powers of this kind? In which country are there differentiated rates of taxation between regions at present?

Answer given by Mr Bolkestein on behalf of the Commission

(7 May 2003)

Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils(1), Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils(4) and the case-law of the Court of Justice lay down that, for each product subject to a harmonised excise structure, Member States must apply a single national rate of taxation which must be higher than the minimum rate stipulated at EU level(2).

The procedure under Article 8(4) of Directive 92/81/EEC, however, allows the Council, acting unanimously on a proposal from the Commission, to authorise Member States to introduce exemptions or reductions in duty for specific policy considerations.

Rates of excise duty on mineral oils are differentiated in a number of Member States owing to geographical factors, e.g. in France, where differential rates are granted in the framework of certain policies aimed at assisting areas suffering from depopulation. The differentiation generally relates to specific regions and products. Italy for instance is allowed to reduce the excise duty on fuel oil for the production of steam, and on gas oil used in ovens for drying and activating molecular sieves in the region of Calabria.

Such derogations, therefore, are specific rather than general and of limited duration.

At the end of 2001, Spain passed an act(3) allowing a differential rate of fuel tax to be implemented at regional level. The revenue from the tax would be used, it said, to finance the health system, responsibility for which in future would fall to the regions. The Commission is currently examining whether the act complies with Community law.

The Commission would underline lastly that the use to which excise revenue is put is a matter for the Member States themselves.

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

(2) Note too that this general principle is the cornerstone of the future energy tax directive on which Finance Ministers reached political agreement on 20 March 2003.

(3) Act 24/2001 of 27 December 2001 (BOE of 31.12.2001).

(4) OJ L 316, 31.10.1992, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994).