CELEX: 51987PC0327
Language: en
Date: 1987-08-21
Title: PROPOSAL FOR A COUNCIL DIRECTIVE ON THE APPROXIMATION OF THE RATES OF EXCISE DUTY ON MINERAL OILS (presented by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (87) 327
Vol. 1987/0190
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                 COM(87 ) 327 final / 2
  REVISED VERSION
                                                 Brussels , 21 August 1987
                                PROPOSAL FOR A COUNCIL DIRECTIVE
                       ON THE APPROXIMATION OF THE RATES OF EXCISE DUTY
                                         ON MINERAL OILS
                             (presented by the Commission)
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     COM(87 ) 327 final / 2
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 ---pagebreak---                                                                       соПП}/ъ
                                       A
                   Proposal for a Council Directive on the
         approximation of the rates of excise duty on mineral oils
                            EXPLANATORY MEMORANDUM
I.    INTRODUCTION
The overall approach towards completing the internal market as far as
indirect taxation is concerned is described in the Global Communication
to the Council ^*. That Communication sets out the reasons underlying
the proposals which the Commission is making and deploys the arguments
in their support . It is particularly important therefore that the
present document should be read in conjunction with the Global Communication .
This proposal     for a Directive concerns the rates of duty on mineral oils .
(1 )
     C0M(87 ) 320 Final .
 ---pagebreak---                                      - 2 -
II .   GENERAL CONSIDERATIONS
1.     Mineral oil products are generally divided into the following
categories : petrol , road diesel , heating gas . oil , heavy fuel oil ,
kerosene , liquid petroleum gas , lubricants and other products .
2.     Most of the mineral oil products mentioned are subject to excise
duties in all Member States , but there is a great diversity in the rates ,
in the treatment of individual products and in the range of exemptions
operated .
3.     The Commission has already forwarded to the Council a proposal for
a Directive ^* harmonizing the basis of assessment of the excise duties
on these products .     The present proposal sets out to approximate the rates
of taxation .
4 . * The present diversity of taxation within the Community reflects the
fact that mineral oil products do not , with the exception of petrol and
diesel , compete with one another .     The varying forms of taxation    applied
iri the Member States are also influenced by local conditions such as
climate and the availability of substitutes . Environment , transport and
energy policies also play a part in determining Member States' taxation
policies .
5. ;   In seeking to approximate excise duties on mineral oil products these
factors must be borne in - mind .   So too must the fact that these croducts
are used both for final private consumption and as industrial and conne-cial
inputs .
     OJ Ne C 92, 31 .,10- 1973
                                                                ./.
 ---pagebreak---                                     - 3 -
6-    The Commission has not attempted , in view of the diversity of
taxation in Member States and the diversity of uses to which mineral oils
are put , to formulate a common overall approach to the approximation of
rates of duty on mineral oils as a whole . It has instead examined each
category of products individually and proposed a rate of taxation which
is particularly suited to the product sector concerned and is consistent
      «
as far as possible with the general current practice in the Member States .
7.    The Commission has taken as a starting point in each category ( as
in the case of other excise duties ) the simplest possible approach - namely
the arithmetic average of existing rates - and proposes this rate for adc-ot’ on
unless there is a convincing reason to the contrary , e.g. where the
variations in the tax incidence and consumption for a product between
Member States are so large as to give rise to unsatisfactory results .
In these cases a weighted average is proposed .
III .   RATE APPROXIMATION
1.      Petrol
Adoption of the arithmetic average of existing rates , i.e. 340 ECU per
1000 litres , would increase very slightly the revenue of the Member States
 taken together .       Whilst this rate involves significant adjustments for
virtually all Member States , the Commission found that because of the . present
diversity in rates the weighted average , i.e. 336 ECU per 1000 litres ; gives
no better result in this respect . Given that consumption of petrel is
largely private and accounts for ever two-thirds of existing excise revenue
from mineral oils , the Commission considers that a 1 slight increase in over¬
all yield is acceptable .     The Commission therefore proposes that the
arithmetic average rate be adopted for petrol .
Four Member States maintain a reduced excise rate to encourage the use of
unleaded petrol . The average reduction is 8.8 X. The Commission proposes
that this practice be adopted by all Member States . The budgetary
implications of this environmentally desirable policy will of course
depend on the future pattern of consumption of unleaded petrol .
                                                             ./.
 ---pagebreak---                                  - 4 -
2.    Diesel
There are wide variations between Member States both in the rates of
excise duty applied to diesel and in the relationship between those
rates and the rates applied to petrol .
Adoption of the arithmetic average /, which is calculated at 153 ECU , would
result , on a Community-wide basis , in a reduction of more than 10% of current
revenue from excise duty on diesel . At the same time it would be less
than half the rate proposed for petrol . Although the use of diesel is
currently overwhelmingly commercial , any reduction in its tax burden
vis -a-vis petrol would artificially encourage the use of small diesel -
engined vehicles by private motorists thus compounding the reduction in
revenue by substitution for higher-taxed petrol .
For these reasons , the arithmetic average is not considered to be a
satisfactory basis for approximation . The weighted average , at 177 ECU
per 1000 litres , is approximately half the rate proposed for petrol .
This is consistent with the current average relationship within the
Community between diesel and petrol . Its effect is revenue neutral for
the Community as a whole although its adoption would necessitate
appreciable adjustments for individual Member States . As no other
approach considered is any more satisfactory in this respect , the
Commission is proposing the adoption of the weighted average rate for
diesel . _
3.    Heating gas oil
There are considerable variations in the rate of taxation and the level
of consumption of heating gas oil within the Community . The arithmetic
average of existing rates of duty ( 62 ECU per 1000 litres ) would raise
the level of revenue from duty on heating gas oil by about a quarter within
the Community as a whole .  Demand for this product is particularly deoendent
on its competitiveness in the face of other heating fuels and this must
 ---pagebreak---                                       - 5 -
militate against an increase in the incidence of taxation of the       size
which the arithmetic average would produce .
The weighted average of 50 ECU per 1000 litres would , on the other hanc ,
produce no overall change in revenue , taking the Community as a whole ,
although it would of course entail adjustments for individual Member
States .
The Commission, having examined these two approaches and being part \ larly
mindful of the competitive implications involved ( in the face of alternative
fuels ) proposes the adoption of the weighted average rate of 50 ECU per
1000 litres for heating gas oil .
4.     Heavy fuel oil
Similar considerations to those affecting heating gas oil also apply to
heavy fuel oil . As use of this product is predominantly commercial any
increase in the overall incidence of taxation would be an addition to
industrial costs and open to objections on these grounds .
Since the arithmetic average of 26 ECU per 1000 kg would produce a very large
increase in revenue         across the Community as a whole , the Commission
proposes instead that the weighted average of 17 ECU per 1000 kg be adopted
for heavy fuel oil .
5.     Gases ~ L.P.G. and Methane
       ( a ) As heating fuels
             In its proposal for a Directive harmonizing the structure of
             excise duties on mineral oils ^ which is already before the
             Council , the Commission proposes that the use of these fuels *'or
             heating should be exempted from excise duty and treated on an
             equal basis with coal , coke gas and electriity; such use should
             therefore be subject only to VAT .
(1 )
     0J No C 92 , 31.10.1973
 ---pagebreak---                                                       f
                                        - 6 -
       ( b ) As aotor propellants
             Since most L.P.G. used as a motor fuel is consumed by private
             motorists , the Commission proposes that , as with petrol , the
             arithmetic average of existing rates , namely 85 ECU / 1000 l ,
             should be adopted as the common rate of excise duty on this
             product , rather than the weighted average of 61 ECU / 1000 l .
             It follows logically that the very minor use of methane as a
             motor fuel should be taxed on the same basis as L.P.G.'
6.     Kerosene ( Medium oils )
This product is largely used as aviation fuel(for turbo-prop and turbo-jet
aircraft ) and is generally exempt from excise duty for commercial users .
             *  __           .     .   __ .      '  .   . . (1)
The Commission 's proposal on structural harmonization          proposes that
this exemption be adopted on a Community-wide basis . When used for non ¬
exempt private flying , however, the Commission proposes that kerosene
should be taxed at the same rate as petrol , viz . 340 ECU per 1000 litres .
A relatively small quantity of kerosene is used for the same purposes as
heating gas oil and the Commission considers it logical that , when used
for this purpose , kerosene should be subject to tax at the same rate as
heating gas oil , i.e. 50 ECU per 1000 litres .
7.     Lubricants
Most Member States do not tax mineral oils when used as lubricants and
the Commission has already proposed, in its proposal to harmonize excise
duty structures^^hat lubricants be exempted from excise duty within the
Community , in line with common practice .
(1 )
     OJ No C 92 , 31.10.1973 .
 ---pagebreak---                                       - 7 -
8.    Summa ry
The respective average rates ( in ECU per 1000 Litres ) for each product and
the Commission 's choice of rate are shown in the following table :
Product                                    Arithmetic       Weighted     Proposed
                                             Average         Average       Rate
Petrol - leaded                               340              336         340
         - unleaded                            -                -
                                                                           310
Diesel                                        153              177         177
Heating gas oil                                62               50          50
Heavy fuel oil ( per 1000 kg )                 26               17          17
Gases :
- LPG and Methane                              85               61          85
Kerosene :           *“
- as propellant                               340              336     -   340
- other uses                                   62               50          50
9 . Effect
In the Commission 's view the rates proposed are a fair and reasonable
solution given the diversity of the existing tax treatment for these
products in the Member States .
It is expected that , on the basis of these rates and assuming unchanged
demand, five Member States ( DK, F, GR , IRL, I ) will lose revenue , six
 ( B, D, L , iML, UK, SP ) will gain revenue and one ( P) will be virtually
unaffected . The overall revenue effect for the Community as a whole will
be negligible .
                            I
 ---pagebreak---                                     - 8 -
 IV .  COMMENTARY ON ARTICLES
The following comments are called for on the individual articles of the
proposal for a Directive .
                                 Article 1                                       ,
This article lays down the principle that common rates of excise duty
shall apply to mineral oils by 31 December 1992 .
                                  Article 2
This article lays down the scope of the Directive and defines its terms .
                                  Article 3
This article provides for the periodic adjustment of the common rates -
this is considered necessary for any duty expressed in specific , as opposed
to ad valorem terms - laying down that the system of adjustment shall be
established by a subsequent Directive .
                                  Article 4
This article lays down the common rates of excise duty for leaded and unleaded petrol
                                  Article 5
This article lays down the common rate of excise duty for diesel .
                                                                                   \
                                  Article 6                                         i
This article lays down the common rate of excise duty for heating gas oil .
                                  Article 7
This article lays    down the common rate of excise duty for heavy fuel
oi l .
                                                              ./.
 ---pagebreak---                                   Artide 8
  This article lays down the common rate of excise duty for liquid petroleum
  gas and methane .
          •                       Artide 9
  This article lays down the common rate Of excise duty for kerosene .
                                 Artide 10
  This article lays down the deadline for compliance with the Directive and
 requires that Member States shall inform the Commission immediately of any
. changes .
 ---pagebreak---                                       ίο
                           Proposai for a
                          Council Directive
                                  - »
                  on the approximation of the rates
                    of excise duty on mineral oils
THE COUNCIL OF THE EUROPEAN COMMUNITIES
Having regard to the Treaty establishing the European Economic Community ,
and in particular Article 99 thereof .
Having regard to the proposal from the Commission ,
Having regard to the opinion of the European Parliament ( 1 ),
Having regard to the opinion of the Economic and Social Committee ( 2 ),
Whereas Council Directive . 13 ) lays down provisions
relating to the structures of excise duty applicable to mineral oils ,
Whereas for the purpose of establishing an internal market without front’e r s
it is necessary to apply common rates of excise duty to each of these products ,
Whereas it is necessary to provide for the periodic adjustment of those
common rates ;
Whereas the excise rate on mineral oils should be charged at a speci **: •■ ate
by reference to a given quantity of the product ,
  HAS ADOPTED THIS DIRECTIVE:
       (1)
      (2)
      ( 3)
 ---pagebreak---                                   Artide 1
Not later than 31 December 1992 Member States shall apply common rates of
excise duty on mineral oils in accordance with this Directive.
                                   Article 2
The mineral oils covered by this Directive are those defined in
Directive .
                                   Article 3
The common rates of excise duty laid down in this Directive shall be
adjusted periodically in accordance with provisions to be established
 before 1 January 1989 in Directives adopted by the Council acting on proposals
 from the Commission.
                                   Article 4
The common rate of excise duty on leaded petrol shall be 340 ECU per 1000
litres .  The common rate of excise duty on unleaded petrol shall be 310 ECU
per 1000 litres .-
                                   Article 5
The common rate of excise duty on diesel shall be 177 ECU per 1000 litres .
                                   Article 6
The common rate of excise duty on heating gas oil shall be 50 ECU per
1000 litres .
                                   Article 7
The common rate of excise duty on heavy fuel oil shall be 17 ECU per
1000 kg .
 ---pagebreak---                                 Article 8
The common rate of excise duty on liquid petroleum gas and methane used
as   road fuel shall be 85 ECU per 1000 litres .
                                Article 9
1 . The common rate of excise duty on kerosene when used as a propellant
shall be 340 ECU per 1000 litres .
2.  The common rate of excise duty on kerosene when used for other ouroeses
shall be 50 ECU per 1000 litres .
                                Article 10
Member States shall bring into force the laws , regulations and administrative'
provisions necessary to comply with this Directive not later than
31 December 1992 . They shall forthwith inform the Commission of any
provisions of national law which they adopt in the field governed by
this Directive .
                                Article 11
This Directive is addressed to the Member States .
Done at Brussels ,
                                                For the Council ,
                                               The President
 ---pagebreak---                                    Fiche d' impact PME
  Proposition de directive du Conseil concernant le rapprochement des taux
 d' accise sur les huiles minérales .
 Le rapprochement des taxes indirectes ( accises et TVA ) est nécessaire dans
  le cadre de la suppression des frontières fiscales .
 La proposition de directive sur les huiles minérales s' intégre dans l' ensemble
 des mesures pour l' achèvement du marché intérieur .
 1 . Contraintes administratives
     néant
 2 . Allègements pour les entreprises .
     Le Livre Blanc sur l' achèvement du Marché intérieur prévoit que le rappro ¬
     chement des taux d' accises constitue un préalable à la suppression des
     frontières fiscales .
     Les entreprises seront donc dispensées des formalités aux frontières,
 3 . Inconvénients pour les entreprises .
     La Commission propose pour les différentes familles des huiles minérales des
     taux de taxation communautaires .
     Ceci aboutit à une diminution des prix dans les pays à taxation élevée , ce
     qui représente       un avantage pour les entreprises mais parallèlement à une
     augmentation dans les pays à faible . taxation dans lesquels les coûts éner ¬
     gétiques pour les entreprises seront augmentés .
     Il faut toutefois rappeler que l' essence , consommée pour sa majorité par des
     consommateurs finals est de loin la source la plus importante de revenus
     dans ce secteur .
A. Effets sur l' emploi
      négligeables
5 . Y a - t - il eu concertation préalable avec les partenaires sociaux ?
     Non , ils n' ont pas été consultés
6 . Il n' y a pas d' approche alternative moins contraignante .