Commission launches debate on 'green' tax reform[fr][de] 

The Green Paper on the use of market-based instruments to support energy and environment objectives was launched by Environment Commissioner Dimas and Taxation Commissioner Kovacs on 28 March 2007. The Commission believes that increased use of these instruments could be a more cost-effective way of achieving the targets formulated during the Spring European Summit than direct legislation.

The Green Paper looks at potential areas and options for further use, highlighting also some of the following challenges:

• Can these market instruments be used without undermining EU-industry competitiveness and without putting extra tax burdens on consumers?
• Can the EU promote a shift from labour taxes to environmental taxes at national level?
• Would a 'Market-Based instruments Forum' be useful to stimulate best practices?
• How can the EU get rid of environmentally harmful subsidies?
• How can the current Energy Taxation Directive be reviewed and streamlined with new energy and environmental objectives?
• How can the use of market-based instruments be combined with the EU emissions-trading scheme?

The discussion paper also recognises that EU unanimity rules on taxation limit the potential influence of the Union on member states.

The European Environmental Bureau called the Green Paper "too timid". It had hoped that the Commission would take stronger leadership and suggested that member states be urged to agree "on a 10% shift in tax income in ten years, from labour to energy and environment, and agree on a minimum level of co-ordination on how to achieve it".