Austria backs energy tax opt-outs

Date: 26/11/1998

By Tim Jones

THE Austrian government is proposing exemptions for households and fuel-guzzling industries in a revamped plan to introduce a pan-EU energy tax.

Vienna hopes the new proposals, contained in a paper drawn up for a meeting of EU finance ministers next Tuesday (1 December), will kick-start stalled fuel-tax talks once Germany takes over the rotating presidency of the Union from Austria in January.

The new Social Democrat/Green coalition in Germany will be eager to give the plan a push in the wake of its own unpopular proposals to hike energy taxes from April next year; levies which will raise an average family's annual fuel bill by more than 100 ecu, according to the German rent-payers' association.

When he introduced his plans for an energy tax earlier this month, German Chancellor Gerhard Schröder stressed that his coalition's proposals could "only succeed in the long term in a European framework".

In his 'options' paper, Austrian Finance Minister Rudolf Edlinger calls for further official-level negotiations over the European Commission's most recent proposal for energy taxes. This would extend the scope of minimum rates of excise duty on mineral oils, set six years ago, to coal, natural gas and electricity. However, Edlinger suggests four areas where ministers and officials could show flexibility.

Firstly, he says, exemptions could be granted to "energy-intensive industries and firms which meet targets for energy efficiency".

This would follow the model established by the Bonn government, which recently agreed to impose fuel taxes, but with exemptions for big consumers such as producers of cement, aluminium and glass.

A second exemption or reduced rate could apply to the use of energy "for private consumption on social grounds" - a key demand of the British Labour government. UK Finance Minister Gordon Brown was not prepared to accept any deal which would lead to a rise in domestic fuel tariffs.

Diplomats are hopeful that this offer of an exemption, plus the recent conclusions of a report drawn up for Brown by a think-tank headed by British Airways chairman Colin Marshall, have made London more open to the idea of an energy tax - despite the UK finance minister's warning this week that tax decisions should not be "handed over to Europe".

Thirdly, Edlinger suggests the "temporary introduction of special provisions" for member states with "geographical concerns" about increasing minimum rates of duty on mineral oils. This reflects the fact that Spain, Greece and Portugal are still heavily reliant on burning oil to produce energy.

The final option in the paper would allow for zero rates of excise duty on coal and electricity for a "transitional period", to be followed by "flexible deadlines" by which minimum rates would have to rise.