Slimmed-down energy tax in pipeline

Date: 21/10/1999

By Tim Jones

NORTHERN EU governments will call for a doubling of Union-wide minimum petrol duties if Spain continues to hold out against a wider energy tax deal.

Diplomats say the back-stop plan for a slimmed-down energy tax, which has been floated by Nordic, German, Dutch and British negotiators, reflects growing frustration at Madrid's unwillingness even to discuss extending pan-EU duties to electricity, coal and natural gas consumption.

“This would at least remove one obstacle to this package,” said a diplomat. “There is no guarantee the Spanish would even accept this, but it is one way of eating away at their opposition.”

The European Commission's 31-month-old proposal to har-monise Union energy taxes calls for new minimum excise duties on coal, electricity and gas, and for existing minimum levies on mineral oils to be uprated from €287 per thousand litres of petrol and €245 for diesel to €500 and €393 respectively by January 2002.

Under the plan devised by northern EU memberstates, Internal Market Commissioner Frits Bolkestein would be asked to propose the increase for minimum mineral oils duties separately from the rest of the package.

Supporters of the plan argue that the increase is necessary because the Union minima have fallen well behind the rates now levied in member states, ranging from €330 per 1000 litres of unleaded petrol in Greece to €663 in the UK.

Even allowing for inflation, by 2002, the Commission's proposed increases would raise the minimum duty for petrol to 31&percent; higher than the rate operating in Spain and 45&percent; above that in Greece. The southern member states also oppose the setting of EU minima on principle.

The Finnish presidency believes Bolkestein would not have to make a new formal proposal to press ahead with the plan. Under the Union law which introduced minimum mineral oils duties in 1992, the Commission was told to reassess the EU-wide minimum rates and could propose uprating under this mandate.

The Spanish have opposed the latest energy tax plan since it was launched and have effectively blocked all discussion of the idea since December 1998. Madrid has found support from the Greeks, Portuguese and Irish while those most in favour of EU energy taxes are Denmark, Sweden, Belgium, Austria, Germany and the Netherlands.

Finnish Finance Minister Sauli Niinistä has been unable to preside over any negotiations on the proposal since Finland took over the Union presidency in July, and a gathering of officials originally planned for next Tuesday (26 October) has been cancelled because of the lack of progress in talks with Madrid. Niinistä is now trying to push the issue onto the agenda of the next meeting of EU finance ministers on 8 November.