Commissioners heal rift on green tax guidelines

Date: 26/09/1996

EUROPEAN Commissioners Mario Monti and Ritt Bjerregaard have stepped into the breach to patch up an internal dispute over Commission policy on 'green' taxes.

Following months of wrangling, hopes are now rising that the Commission will be able to agree its long-delayed framework for environmental levies before the end of October.

Bjerregaard's staff in Directorate-General XI (environment) have been attempting to finalise a set of guidelines to help local and national authorities judge whether or not new taxes with environmental objectives are in line with EU law.

But their proposals ran into opposition from Monti's officials in DGXV (internal market) concerned about the smooth running of the single market following recent controversies over Germany's packaging law and Luxembourg's proposed eco-tax.

The log-jam now appears to have been broken, with officials reporting that the two Commissioners involved have “had a chat” and reached agreement on key aspects of the proposals. It will now be left to a working group to thrash out the final details.

The communication will attempt to establish a blueprint, spelling out which levies are likely to fall foul of basic provisions in the EU treaties for creating a single, discrimination-free market.

To do this, it clarifies the boundaries of Community law, and whether it is based on the Treaty of Rome, secondary legislation or legal rulings.

“Each time a member state comes forward with an environmental levy, they are confused as to what they can and cannot do. Then we have a number of questions from our internal market, tax, competition and environment divisions. At the moment, it is all on a pretty ad hoc basis,” explained an official.

But officials stress there are no plans to follow up with a draft directive. “On taxation issues, emotions come into play immediately,” said one.

The Commission is currently involved in a heated dispute with the Bonn government, claiming the German quota and deposit system for packaging discriminates against imported drinks. But its draft paper points out that the 1994 Packaging Directive allows a link between an economic instrument and a refill requirement “provided that the economic instrument contributes to the environmental objective of the directive”.

DGXI is keen to build on the precedent in the 'Danish bottle case', which decreed that punitive fiscal measures were permissible if the environmental benefits were in proportion to the disadvantage caused to the internal market.

The draft paper suggests member states choose measures “with the least negative impact on the internal market, taking into account the cost-effectiveness of the different measures, the internalisation of external environmental costs and the preferences of their population”.