Brussels, 13 April 2011
Energy taxation: Commission promotes energy efficiency and more environmental friendly products
The European Commission has today presented its proposal to overhaul the outdated rules on the taxation of energy products in the European Union. The new rules aim to restructure the way energy products are taxed to remove current imbalances and take into account both their CO2 emissions and energy content. Existing energy taxes would be split into two components that, taken together, would determine the overall rate at which a product is taxed. The Commission wants to promote energy efficiency and consumption of more environmentally friendly products and to avoid distortions of competition in the Single Market. The proposal will help Member States to redesign their overall tax structures in a way that contributes to growth and employment by shifting taxation from labour to consumption. The revised Directive would enter into force as of 2013. Long transitional periods for the full alignment of taxation of the energy content, until 2023, will leave time for industry to adapt to the new taxation structure.
Algirdas Šemeta, EU Commissioner in charge of Taxation, Customs Union, Audit and Anti-Fraud said: "The modernised energy taxation system comes at the right moment. Member States are now defining their strategies to exit from the crisis and meet the Europe 2020 targets. They call for action to reduce our dependency on fossil fuels. A fair and transparent energy taxation is needed to reach our energy and climate targets. Our common goal is a more resource-efficient, greener and more competitive EU economy. This proposal sets a strong CO2-price signal for businesses and consumers, it is also an opportunity to shift the tax burden from labour to consumption, in order to favour growth enhancing taxation".
Taxation of energy products is to a certain extent harmonised at EU level. The Energy Taxation Directive already now sets forth minimum rates for the taxation of energy products used as motor fuels and heating fuels as well as electricity. However, the Directive has become outdated and inconsistent. Taxation based on volumes of energy products consumed cannot address EU's energy and climate change targets. It also fails to set economic incentives to foster growth and stimulate job creation. Taxation of energy products must better take account their energy content and their impact on the environment.
The revised Energy Taxation Directive will allow Member States to make the best possible use of taxation and, ultimately, support "sustainable growth". To do so, it proposes splitting the minimum tax rate into two parts:
Social aspects are taken into account with the option for Member States to completely exempt energy consumed by households for their heating, no matter what energy product is used.
Long transitional periods for the full alignment of taxation of the energy content, until 2023, will leave time for industry to adapt to the new taxation structure.
The benefits of revising Energy Taxation
The proposal will now be discussed by the European Parliament and the Council and is expected to enter into force as of 2013. It foresees, where appropriate, a gradual introduction of the new taxation system.
For more information:
See also Memo/11/238