'Son of Carbon Tax' - new proposals leaked

02 December 1996 00:00  [Source: ICB]

Original proposals for a Europe-wide energy tax were shelved after member states failed to agree on it. Now it seems there are new moves afoot to bring in just such a tax.

A leaked European Commission document has revealed new plans for Europe-wide energy taxes. The Commission's original proposals for a tax, based 50:50 on energy usage and CO₂ emissions, collapsed earlier this year after member states failed to reach agreement. But a draft document leaked last week has re-ignited the debate.

The document, produced by the customs and indirect taxation directorate DGXXI, proposes increasing the current excise duties on mineral oil fuels and extending duties to coal, natural gas and electricity.

DGXXI spokesman Steve Todd said the 'Son of Carbon Tax' scheme was meant to establish a level playing field for liquid fuels compared to others. 'It is to try to encourage economy with fuels by making them a little bit more expensive,' he said.

The 'very low' minimum rates proposed, similar to the current BF1/litre ($0.03/litre) for heavy fuel oil, could be increased once the scheme became law. The tax would be administered by EU national governments, which would be able to raise levies above minimum rates and decide how revenues should be spent.

The European chemical industry council, Cefic, has joined six other trade groups representing large energy users, to condemn the proposals.

Spokesman Claude Culem said the scheme contradicted the Commission's commitment to enhance European industry's competitiveness and liberalise the gas and electricity markets. 'It is nothing other than a revenue-raising instrument,' he said.

Harmonising energy taxes across Europe was desirable, but the proposal only aimed at harmonising taxes at a higher level, said Culem. Industry groups have not yet calculated costs to members.

Energy-intensive industries had dramatically improved their efficiency voluntarily, added Culem, and taxes would deprive them of the funds needed to invest further.

The proposal could be finalised by the Commission before Christmas.

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