Internal market fears over use of ‘green levies’

Date: 02/05/1996

By Michael Mann

EUROPE'S business community fears that planned Commission guidelines on the use of 'green levies' could seriously undermine the workings of the internal market.

The Commission is due to present its ideas to member state experts at a meeting next week. But there is widespread concern that its proposals will be so vague that they will give member states carte blanche to introduce environmental charges on a range of products without having to prove that they go no further than is strictly necessary to fulfil environmental goals.

The principle of 'proportionality' is designed to ensure that there is no discrimination against goods moving across the EU's internal borders.

Although the document will recommend that member states choose the instrument that achieves their environmental target with the least restriction of the free movement of goods, it is thought unlikely to require an absolutely clear-cut commitment to applying the proportionality principle to fiscal measures designed ostensibly to protect the environment.

According to the Union's employers' federation UNICE, the use of such levies should not be allowed to restrict the free movement of goods more than traditional regulations.

“From what we are hearing, the internal market side will be played down in the Commission's thinking. There will be no clear statement on non-discrimination,” said one industry analyst.

But Commission officials deny that their thinking will undermine the Union's commitments to ensure the smooth running of the single market.

“We're going to suggest indicative guidelines on what member states can and cannot do, based firmly on existing jurisprudence and treaty articles. The principle of proportionality obviously has to be considered,” stressed one. He said the document to be discussed by the

so-called 'Enveco' committee next Wednesday (8 May) would be a discussion paper designed to gauge member state opinion, and would “not represent the views of the Commission”.

The committee comprises economics, industry and environment experts from the member states, and provides an informal forum for discussing the economic aspects of proposed environmental policies.

UNICE officials stress that they are not questioning the usefulness of fiscal measures in environmental protection, but are concerned that the guidelines would “lack clear signals of potential incompatibility between levies and the single market in cases where no sound environmental reasons are given for green taxes”.

Industry experts believe this approach would undermine member states' ability to mount challenges to disputed legislation such as the proposed eco-tax in Luxembourg. Four member states - the UK, France, the Netherlands and Spain - have asked the Commission to look into the legality of the scheme, which would impose a levy on non-reusable drinks containers and set minimum quotas for reusable packaging.

Several member states have also started to look at fiscal incentives to encourage environmental protection. Denmark has a tax on carrier bags with handles and disposable tableware, Italy has one on material used to make plastic film for a number of uses, and a Belgian eco-tax covers paper, cardboard, fertilisers, batteries, disposable razors and cameras, and containers for a range of industrial products.

Pointing to the recent challenge to the German packaging ordinance, industry is increasingly worried that environmental measures are being introduced on spurious scientific grounds.

Although member states will only hold their first talks on the guidelines next week, Commission officials hope to finalise them before the August break.