Parliament shoots down Commission’s energy tax plan

Conservatives in the European Parliament delivered a setback for European Commission plans to erase tax benefits for diesel fuel, saying that a period of austerity and high fuel costs is not the time for such moves.

MEPS voted 374-217, with 73 abstentions, for an overhaul of the EU executive’s year-old draft energy taxation directive that would require members states to end their practice of taxing diesel fuel at lower rates than gasoline.

The vote also calls for changes to the Commission’s proposed minimum carbon tax on emissions from households, farms and the transport industry not already covered under the EU’s Emissions Trading System, the EU’s main tool to reduce carbon dioxide pollution.

The Parliament’s recommendations are non-binding. But they lay the groundwork for anticipated changes in the Council of Ministers, where Poland has already blockedmoves to impose stronger emission-reductions obligations, and at a time when high fuel prices may tame the political appetite for higher taxes.

The MEP’s decision was seen as a win for consumers and the centre-right that led the fight.

The vote “is a great political victory for the EPP Group, which remained firm on its position. But it is first and foremost a victory for our citizens,” said Luxembourg MEP Astrid Lulling, a member of the European People’s Party and author of the report adopted by Parliament.

Lulling’s report – which recommends 50 amendments – says the draft taxation directive would “have direct negative social impact” from higher prices for coal, natural gas, heating oil and diesel oil.

That is an assertion that was strongly rejected by Algirdas Šemeta, the EU Taxation Commissioner: “The Commission’s proposal does not seek to penalise diesel, but to tax fuels in a neutral way. All fuels would compete on the basis of their merits instead of tax advantages,” he said after the vote.

Consumers already pinched

London MEP Marina Yannakoudakis (European Conservatives and Reformist Group) said the vote was a victory for consumers.

“In the middle of an economic crisis, families are feeling the pinch,” she said. “Does the EU really want to tax its citizens further just for driving their kids to school or for turning on the heating?”

Socialist and Democrats (S&D) leaders also expressed reservations about higher costs for diesel.

“We need to make sure that we have higher taxation for those emissions that are detrimental to the environment,” Hannes Swoboda, the S&D president, said in a statement.

“However, while we will follow this approach it must not lead to an increase of price for diesel. Diesel cars are less polluting and are important for reducing CO2 from our transport system,” the Austrian MEP said.

Environmentalists, however, said such arguments were hollow. Although diesel engines emit fewer greenhouse gases compared to their gasoline counterparts, they release higher levels of smog-causing nitrogen oxide and fine particulate matter that aggravate respiratory problems.

“A majority of MEPs has today voted to include perverse incentives for dirty fuels under the EU’s energy taxation system,” Belgian Green MEP Philippe Lamberts said yesterday.

Parliament’s recommendations also say that aid should be made available to low-income households and charities as energy tax exemptions are phased out, as proposed by the Commission. It also says industries already subject to the EU’s Emissions Trading System should be exempt from a carbon tax.


Statement following the vote on the Energy Taxation Directive in the EP Plenary


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