Commission puts green taxes on agenda for EC's revival

Notice of an impending push for a "greening" of the tax system was served by the European Commission at the EC summit in Copenhagen on 21-22 June. The Commission also presented a first limited list of environmental measures with which it no longer intends to proceed in the light of the subsidiarity doctrine.

The summit was dominated by the question of how to revive economic development within the Community. The debate centred on a presentation from Commission President Jacques Delors on options for economic revival.

Included in an eight-point summary of his presentation is a section titled "Towards a new model of development". This suggests that M Delors is convinced that environmental protection will help to create new jobs. And it also asserts that "taxing scarce natural resources will make it possible to reduce excessive taxes on labour, thus enhancing Europe's economic competitiveness."

How Member States reacted to this specific proposal is unknown. As far as the UK is concerned, Prime Minister John Major made it clear to the House of Commons on 23 June that while he agreed with much of M Delors' diagnosis of the EC's economic problems, he did not concur "with all his proposed remedies."

Strong support for the idea of a greening of the taxation system can be expected from Denmark, where the Government has just announced a plan to make room for substantial cuts in personal income taxes by raising or introducing new environmental taxes. These will cover fuel consumption, vehicles, water and waste. Eco-taxes on products and packaging are also set to be introduced in Belgium next year (see below).

Other Member States may also be supportive, primarily because they are keen to find sources of revenue to counteract their spiralling budget deficits. In Germany, for example, the lower house of Parliament has just approved a Government plan to raise taxes on petrol by 17% and on diesel by 13%, bringing in an extra £3.4 billion per year. Only about 15% of these revenues will be used to reduce existing taxes, mainly by easing taxes on heavy lorries.

However, the Commission's ill-fated proposal for a carbon/ energy tax does little to suggest that any green taxation measures involving mandatory harmonisation have much prospect of being agreed at Community level - though it may be that M Delors has something else in mind.

More will be known about the Commission's thinking later this year. The Copenhagen Council invited it to prepare a White Paper on a medium-term strategy for growth, competitiveness and employment for discussion at the next EC summit in December. Member States were invited to submit specific proposals for inclusion in the White Paper by the end of August.

Following an agreement on the application of the subsidiarity doctrine at last December's EC summit in Edinburgh, the Commission is also due to present next December a list of existing legislation for repeal or amendment (ENDS Report 215, pp 17-20 ). At Copenhagen, it produced a list of items on which it will not be proposing legislation.

The list is believed to include three environmental measures. Two are concerned with aircraft noise. The third is a Regulation which Brussels had been contemplating in order to give statutory backing to the EC network of pollution inspectorates, established under the UK Presidency last year at the instigation of the Dutch (ENDS Report 214, pp 38-39 ). Observers of the EC scene who felt that the legislation would have enabled the Commission to take control of the network's agenda believe that its loss need not be mourned, although it will mean that EC financial backing for the network is now less likely.

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