Draft Directive on minimum energy taxes

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A draft directive laying out the legal framework for minimum energy tax rates across Europe was passed by the Commission of the European Union (EU) in March. Its aim is to introduce minimum rates of taxes across the whole spectrum of energy products in order to harmonise tax systems in Europe. The standard would be operative from January 1, 1998. Most countries already have higher taxes, but at the moment an EU-wide tax system exists only for oil. The EC plan would extend this to coal and natural gas as well as electricity. The Commission does not want to increase the overall fiscal burden but to shift its weighting. Where energy products are taxed, the cost of employment should be reduced to achieve an overall neutral fiscal effect. To support the use of renewable energies, the generators would have the tax returned to them. Consumers will not be worse off through the measure, the Commission assures. Industry with heavy energy use -- making up 10-20% of production costs -- will not have to pay all of the tax. Agreement on the directive is the second major step taken by the EU this year on the environmental front. In early March, member countries also agreed on a target for the whole of the European Union to cut greenhouse gas emissions by 15% by 2010.

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