Eco-tax guidelines attacked from all sides

Date: 14/11/1996

By Michael Mann

PLANNED guidelines for green taxes look set to run into a storm of protest from industries alarmed at their potential effect on the operation of the single market.

Internal debate about the European Commission's long-awaited paper has also brought the Directorate-General for the environment (DGXI) into direct conflict with the industry Directorate-General (DGIII), which commercial sources believe has been “left out in the cold”.

Business groups have welcomed improvements in an updated draft of the Commission's communication on the environmental levies used in member states.

But representatives from a wide spectrum of industrial interests still believe that the Commission is failing to respect the central idea of 'proportionality'.

This is designed to ensure that tax measures established ostensibly to benefit the environment should not discriminate unduly against goods moving across the EU's internal frontiers, and that they are not given undue precedence over more traditional legislative measures.

In a letter to Environment Commissioner Ritt Bjerregaard, the EU committee of the American Chamber of Commerce has warned against the spread of eco-taxes across the Union, citing three main areas of concern.

The organisation, representing European companies of American parentage, believes such instruments are principally a way to generate revenue dressed up as environmental measures.

“Taxes are hard to push down people's throats, so politicians have to find themselves a popular cause,” said an oil industry executive.

The EU committee also believes the “uncoordinated imposition of environmental levies is likely to create barriers to trade within the EU”.

But Commission officials insist that single market concerns were the very reason the Commission began this exercise in the first place, to provide precise guidelines on what could and could not be allowed.

“With this communication, the Commission aims to clarify both the possibilities and constraints and give a practical perspective for action,” says the latest draft of the Commission's paper which has been completed since the summer break.

An official at chemical industry council CEFIC expressed satisfaction that the latest draft had taken on board some of industry's concerns. “But progress has not been nearly good enough on the specific issue of proportionality, achieving a balance between taxes and command and control measures,” she said.

She added that the Commission had to beef up the wording of its proposal to ensure that governments provided a thorough environmental justification for any new fiscal measure they were looking to introduce.

EU legal experts have also been quick to criticise the Commission's revised plans.

They fear the Commission believes the idea of proportionality set out under the single market sections of the EU treaties does not apply to the type of levies dealt with in the report.

Some lawyers claim the Commission's thinking is based on outdated jurisprudence from the European Court of Justice.

They are calling on the Commission to admit that the precedence given to tax measures over single market regulations cannot be applied to green taxes introduced as a direct alternative to more traditional environmental laws.

Bjerregaard still hopes her latest initiative can be published in the coming weeks. But with a growing dispute over biotechnology and a number of other controversial dossiers still awaiting approval, officials are unwilling to be pinned down to a specific date.