TAX NEWS - JUNE 2010
European Union Tax: EU considers green taxes to help tackle debt crisis
EU commissioners are set to debate a plan to introduce a carbon tax and an annual taxation of energy, which would make the greenest fuels the cheapest, later this month, reported Reuters.
Brussels interference on tax matters is usually a bone of contention among EU member countries, but the massive deficit problems now faced by countries such as Italy, Greece and Spain, is providing a window of opportunity for such a tax overhaul, according to an EU briefing document seen by Reuters.
"The global financial and economic crisis has left deep strains on the public finances of most countries," said the draft document. "This [...] should play an important role in offering member states a basis [...] to shift the tax burden away from labour or capital."
Europe's taxation of energy is worth €240 billion (£200 billion) a year, but the way it is raised varies widely from country to country and currently discriminates against renewable energy, according to the document.
The EU aims to cut its CO2 emissions by a fifth over the next decade, but polluters such as transport and households, which respectively account for 23 per cent and 10 per cent of EU emissions, are not currently being tackled by any emissions reduction mechanism.
Carbon and energy tax
The plans under consideration would see the introduction of a carbon tax in the range of €4 to €30 per tonne of carbon dioxide. The draft says such a tax could make a four per cent contribution to the EU's climate change goals.
The second taxation would be on energy, taxing the highest polluting fuels more and the lowest polluting least. Under such rules, biofuels, would enjoy a significant tax cut.
If approved, the new rules would be phased in between 2013 and 2018.
The plans are due to be debated on June 23.
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