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European Parliament opposes end to diesel subsidies

20 Apr 2012

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The neutrality in taxation of fuel types did not get the support from Members of the European Parliament in the report on proposed EU legislation on energy taxation they adopted on 19 April. As the Parliament has only a consultative role on EU legislation on taxation, the final legislation will have to be agreed by Member States at a meeting in June.

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Neutral taxation of motor fuels did not get European Parliament's backing

The proposal on taxation of energy products and electricity that was introduced by the Commission a year ago seeks to update the rules in the EU on taxation of energy products taking into account both the CO2 emissions and the energy content of each product. The new rules include the ending of the favourable treatment of diesel and establishing neutral taxation of fuel types, which was opposed by the European Parliament.

Following the vote, Commissioner for Taxation Algirdas Šemeta criticised the Parliament’s lack of support for the alignment of motor fuel taxation. "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. Moreover, the alignment of taxation rates will allow greener, innovative and more energy efficient fuels a fair chance on the market," he said. 

Long transitional period for car industry 

The proposed rules give the car industry plenty of time to adjust as it is foreseen that they will be fully in place in 10 years time, by 2023. The European Parliament in its report suggested that this transition period gets even more prolonged, with the rules starting to apply in 2030. 

“This is a green growth initiative. It is fully in line with our climate change commitments and the goal of a more resource efficient, sustainable economy in Europe. Moreover, it supports a growth-friendly tax shift in the Member States and could create a million jobs across Europe by 2030”, the EU Commissioner said. 

Council to debate energy taxation in June 

The report that the European Parliament adopted on Thursday has only role of a non-binding opinion as in the area of taxation the co-decision procedure does not apply. 

"The Council and Commission need to speed up their efforts with a view to ensuring the legislative review can be concluded as quickly as possible. However, they must also ensure the final legislation is consistent with the EU's energy and environment priorities. This means endorsing tax neutrality," urged Philippe Lamberts, Member of the European Parliament. 

The finance ministers of the EU Member States are expected to discuss the proposal at a meeting to take place on 22 June 2012. In order to endorse the Directive, the proposed rules will have to be adopted by unanimity. The legislation is expected to enter into force in 2013.

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