‘Better vibes’ in discussions on new energy tax

Date: 04/09/1997

By Michael Mann

SUPPORTERS of the European Commission's plans to extend minimum tax rates to all energy products are quietly optimistic that they have more chance of survival than the ill-fated proposal for an EU-wide carbon energy levy.

But the Luxembourg presidency is putting off any discussion of the main political issues involved until next month at the earliest, aware that the going will begin to get tough once ministers start talking about the tax rates themselves.

Meetings of experts from the 15 EU member states have so far restricted themselves to working on points of drafting, steering well clear of the key political questions which could derail the whole process.

Officials believe member states are adopting similar stances to those taken in the debate over the carbon energy tax, but nevertheless feel the atmosphere is more positive this time around.

“There are definitely better vibes and more of a willingness to discuss,” said one expert, although he added: “We still have not debated any of the touchy areas.”

While Denmark, Sweden, Finland, Germany, Belgium, the Netherlands and Austria want to see the extended excise duties become a reality, “not all of them like the plan the way it looks now”, said another.

The strongest resistance to the proposals is anticipated from Spain, which fears the plan would harm its competitiveness. “Spain is a good negotiator and we might have to buy them off with something,” said a diplomat from one of the countries most in favour of the plan.

Several southern member states have concerns about proposals for higher charges on heating fuels, while coal-producing nations are worried about their extension to coal and France is upset about mooted taxes on electricity.

But unlike its predecessor, the new UK government is not writing the plan off entirely, with officials saying the various ministries involved are still consulting on what London's position should be.

“They are certainly more positive than before and I would not rule out completely the question coming to a head under the UK presidency in the first half of next year,” said an official from another member state.

Under Internal Market Commissioner Mario Monti's proposals, mineral oil duties would be upgraded and applied to coal, natural gas and electricity. While electricity consumption would be taxed, governments could allow rebates for 'environmentally preferable' fuels.

When the proposal was first presented to ministers in March, four spoke out against it. Spain and Greece were the most negative, with the UK and Luxembourg also voicing misgivings.

Two more working groups are planned between now and early October, after which Luxembourg will decide how to go forward. The next ministerial discussion is pencilled in for next month or, more likely, November.

Despite all the potential problems, diplomats are aware of the importance of making progress on Monti's new approach. “If there is no solution with this proposal, the idea is dead. Because this is an internal market measure, if it fails, it will have major repercussions for a range of other things,” said one negotiator.