Member states face energy-tax rebuff

Member states’ arguments for retaining special exemptions from EU energy taxation rules are unlikely to persuade the European Commission, according to officials.

The temporary exemptions, known as derogations, were granted following the adoption of the EU energy tax directive in 2003. Some member states were allowed to apply lower rates than those required in the directive and in some cases total exemptions were allowed.

As set out in the directive, the exemptions expired at the end of last year. Member states are now waiting for Taxation Commissioner László Kovács to decide whether to grant extensions.

An attempt by Ireland to push the Commission for answers at a meeting of finance ministers scheduled for the end of this month (31 January) was unsuccessful. "We had asked for it to be put on the agenda for the Commission to give an update on the expiry of derogations," said one Irish diplomat.

A Commission official signalled that Kovács has little intention of succumbing to pressure. "All derogations for member states expired at the end of last year. These derogations are not justified. Member states have to take the necessary measures to see that taxes are applied," she said.

Countries seeking an extension argue that the transition period to full implementation has not been long enough. Full implementation would, they claim, constitute a heavy burden on companies and individuals.

But the Commission already indicated last June that it considered most exemptions as unnecessary. In December, arguments submitted by the UK for continued exemptions for gas oil used for leisure purposes were firmly rejected, despite claims that enforcement would harm tourism-based regeneration schemes.

Member states’ arguments for retaining special exemptions from EU energy taxation rules are unlikely to persuade the European Commission, according to officials.