WRITTEN QUESTION E-1193/00

by Christel Fiebiger (GUE/NGL) to the Commission

(12 April 2000)

Subject: Distortion of competition caused by differences in the price of agricultural diesel

In the EU the price of diesel fuel used to power agricultural vehicles varies greatly. In France, for example, it is 0,40, in the Netherlands 0,35 and in Denmark 0,31, whilst farmers in Germany have had to pay 0,61 since 1 January 2000.

Does the Commission see any opportunity for creating a level playing field in the area of Community agriculture? How could distortions of competition in this area be removed?

Answer given by Mr Bolkestein on behalf of the Commission

(29 May 2000)

The prices of diesel used as fuel in agriculture for vehicles such as tractors and stationary machinery, vary considerably from one Member State to another. Fuel prices differ, to a certain extent, for fiscal reasons and in particular the way each Member State applies the existing fiscal provisions included in the Community legislation.

In fact, Community legislation, in particular Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils(1), provides, under its Article 8(2f), the possibility for Member States to apply total or partial exemptions or reductions in the rate of duty to mineral oils to be used, under fiscal control, exclusively in agricultural and horticultural works, in forestry and inland fisheries. Therefore, Member States are entitled not to apply the full minimum rate of excise duty on diesel used as propellant, which is fixed at 245 per 1 000 litres (Article 5 (1) of Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils(3)), but to apply a rate ranging between 0 and 245.

The Commission presented in March 1997 a proposal for a Council directive restructuring the Community framework for the taxation of energy products(2), the main thrust of which was the need to modernise the Community system for the taxation of mineral oils, to extend its scope to all energy products as well as to allow the Community to reap the full benefit of the single market and meet its environmental objectives.

The proposal provides, under its article 7, a reduced minimum rate of excise duty to be applied Community-wide on diesel used as propellant in agriculture, the level of which should be fixed at first stage at 32 per 1000 litres. This proposal should contribute considerably, if adopted, to the approximation of taxation levels applied by individual Member States in the area of fuels used for agricultural purposes.

This proposal has not yet been adopted by the Council. The Commission has made a considerable effort so far to make this adoption possible and has declared its willingness to examine compromise solutions aimed at reducing the economic effect on certain Member State economies. These may include provisions providing for arrangements such as reduced minimum rates of taxation for certain energy products, transitional periods or tax exemptions or reductions for energy intensive industries.

Finally, on the issue of VAT, given the current conditions (no approximation of tax rates, numerous special arrangements, options, derogations), it is unlikely that any significant progress towards a single rate to be applied Community-wide will be made in the immediate future. VAT rates currently applied on diesel used for agricultural purposes vary between 12 and 25 %.

(1) OJ L 316, 31.10.1992.

(2) OJ C 139, 6.5.1997.

(3) OJ L 316, 31.10.1992.