ECOFIN: update on Energy Tax Directive

On June 22 the Council discussed a proposed directive on the taxation of energy products and electricity aimed at restructuring directive 2003/96/EC on energy taxation in order to align it more closely with EU energy and climate change objectives.

The presidency concluded that there was agreement amongst member states that minimum tax levels should be laid down in the directive, taking as their reference points the energy content and CO2 emission levels of energy products. But member states should retain maximum flexibility to determine the structure of their national energy taxes, and provisions on the principle of proportionality might have to be deleted.

Under the Commission’s proposal, energy taxation would consist of two components: CO2-related taxation and general energy consumption taxation. The proposal revises the minimum level of taxation to reflect CO2 emissions and energy content, whilst ensuring consistency across various sources of energy (proportionality principle). It also seeks to reduce the tax burden on renewable energies.

In March 2008, the European Council called for a revision of the energy taxation directive to bring it more closely in line with EU energy and climate change objectives. The Commission presented its proposal in April 2011.

The draft directive is also aimed at contributing to the promotion of employment and growth by encouraging member states to impose higher taxes on polluting energy products whilst reducing the tax burden on labour.

Based on article 113 of the Treaty on the Functioning of the European Union, the directive would require unanimity in the Council for its adoption, after consulting the European Parliament (special legislative procedure).

Source: Council of the European Union


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