Germany blocks energy tax deal

During the ECOFIN Council of 3 December, the EU’s finance ministers again failed to reach a compromise on the proposed taxation of energy products. Germany is the only country still opposing the Danish Presidency’s compromise proposal, which needs unanimity to be adopted.

The main outstanding issues are the following:

  • the possibility to set national levels below the minimum: Member States would be allowed to apply zero taxation for energy-intensive businesses and 50 per cent of the minimum levels for businesses that are not energy-intensive;
  • the arrangements for the use of diesel oil: especially controversial here is the reduced rate some countries provide for their road haulage industry;
  • the taxation of energy products and electricity for the agriculture, horticulture and forestry;

 

TheGerman governmentkeeps blocking a possible compromise, because its road hauliers have to pay taxes for their diesel, whereas France and other countries have granted them reduced tax rates. Germany is also opposed to zero taxation for energy-intensive businesses.

 

Since 1997, the EU has been discussing the so-called "Monti proposal" for the introduction of an EU-wide energy tax. At their Barcelona Summit in March 2002, the EU Heads of States asked the Council to reach an agreement on the adoption of this energy tax Directive before the end of 2002. This objective was reaffirmed at the European Council meeting in Seville in June 2002.

 

The finance ministers will reconsider this proposal during an extraordinary ECOFIN Council foreseen for next week.

 

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