Employers slam energy tax proposal

New tax would damage competitiveness, do little for the environment says UNICE

The employers' organisation, UNICE, has slammed European Commission plans to introduce an EU-wide energy tax. In a position paper sent to EU finance ministers -who are holding their first discussion on the Commission's proposal today - UNICE says that energy taxes would damage industry competitiveness, do little to reduce greenhouse gas emissions and have "no real impact on job creation".

Published in March, the Commission's draft directive on energy taxation aims to impose EU-wide minimum tax rates on all energy products (ENDS Daily 13 March). At present, EU excise duties apply only to oils. The new proposal seeks to extend the system to coal, gas and electricity.

The Commission claims that the proposal "does not introduce a new tax". UNICE, roundly rejects this assertion, arguing that in the short-term the proposed measure would lead to additional taxes in several countries - notably Spain and Greece - and in the long-term to "a large and generalised increase in energy taxes in all member states".

UNICE also questions the intended fiscal neutrality of the proposal, whereby any increase in energy costs would be offset by a reduction in labour costs. "History shows that the introduction of new energy taxes has not been offset by equivalent tax reductions elsewhere in the system", their position paper states.

The Commission contends that the proposal would have a "double dividend" in terms of employment and the environment. UNICE says this is debatable, claiming that energy taxes would have "no real impact on job creation" and little effect on carbon dioxide emissions. A spokesman for UNICE said that the proposal was always intended to be more of an economic than an environmental measure.

Even with the compensation measures for energy-intensive industries proposed by the Commission, energy taxes would lead to a "considerable increase" in production costs and "create an additional handicap to the competitiveness of European companies", says UNICE. Instead of taxing firms even more, says the employers' organisation, "every effort should be made to reduce, and not increase, the weight of taxation".

Although there is little chance of the Commission's proposal being adopted by finance ministers in its present form - taxation measures require unanimity and several countries are known to be against it - UNICE wants to make sure that its opposition to the proposal is clear to all concerned.

Follow Up:
Union of Industrial and Employers' Confederations of Europe (UNICE), e-mail: main@unice.be.

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