France supports EU energy tax proposal

EU-wide minimum tax rates on energy essential to combat climate change, says Paris

The French government has thrown its weight behind an EU proposal to set minimum excise rates on a wide range of energy products. France has issued a position paper saying that a move to harmonise EU energy tax is essential as a tool to combat emissions of greenhouse gases, and calling for a "significant and rapid" increase in tax on traditional fuels.

France's strong endorsement of the proposal contrasts sharply with staunch opposition recently expressed by Spain, which argues that the minimum tax levels would mean massive price hikes for its citizens (ENDS Daily 13 April). The policy paper should strengthen the hand of the German presidency which, along with the Commission, hopes to move the issue forward at the next meeting of EU finance ministers in Brussels on 25 May.

When the Commission first issued the proposal two years ago, France was one its most vociferous opponents, along with Spain and the UK (ENDS Daily 13 March 1997). Now, however, the UK says it will support the measure as long as there is the possibility of exemptions for domestic fuel bills, an element which seems to be acceptable to most member states.

Far from opposing the Commission's draft tax reform, France is now criticising it for proposing levels which are too low. It would like to see a regular increase in fuel tax in the road transport sector, as well as work at the international level to impose tax on aviation fuel.

France singles out road transport as the sector where fuel tax increases are most needed and it says that the increases - proposed to be phased in by 2002 - should be brought forward if possible. The tax differential allowed between petrol and diesel (with lower tax on diesel) should be removed as it is "in no way justified - not on fiscal, environmental nor economic grounds".

In an introduction to its paper, France states that it would have preferred an EU tax on carbon dioxide (CO2) emissions - which is what the Commission originally proposed, but which member states refused to accept. Such a tax would have excluded nuclear power, which produces no CO2 and is France's main source of electricity. France calls for lower minimum tax rates for fuels which produces less pollution than others, such as liquefied petroleum gas and natural gas.

Follow Up:
EU Council of Ministers, tel: +32 2 285 6111.

Correction, 10 May 1999
In our article "France supports EU energy tax proposal,"(ENDS Daily 5 May), we reported that the French governmentwas proposing to "remove" the differential in taxes chargedon petrol and diesel as road fuels. The text in fact calledfor the differential to be "reduced".

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