Taxation of unleaded petrol and gas oil (debate) 
President
The next item is the report by Olle Schmidt, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a Council Directive amending Directive 2003/96/EC as regards the adjustment of special tax arrangements for gas oil used as motor fuel for commercial purposes and the coordination of taxation of unleaded petrol and gas oil used as motor fuel - C6-0109/2007 -.
László Kovács
Member of the Commission. - Mr President, I very much appreciate the support of the Committee on Economic and Monetary Affairs to the Commission proposal and in particular the efforts of the rapporteur, Mr Schmidt, to find a compromise.
As you know, the Commission proposal was presented in March 2007. Our objective was to raise and approximate the minimum levels of excise duty on diesel and unleaded petrol in order to maintain the real value of the minima, and to approximate the national rates in order to significantly reduce what is known as 'fuel tourism'.
The reduction of fuel tourism would not only ensure the proper functioning of the internal market for the hauliers, but would reduce the extra kilometres and consequently the extra greenhouse gas emissions, which are detrimental to the environment.
I should stress that, during the Council discussions, a large number of Member States have underlined the positive effect of the Commission proposal on the environment, particularly on climate change and global warming and the proper functioning of the internal market.
As regards Mr Schmidt's report, I appreciate very much the positive attitude to the Commission proposal taken in the report and the efforts made by the rapporteur to find a compromise position acceptable to all. However, the Commission cannot accept most of the amendments suggested in the report. Let me elaborate on it.
The Commission is opposed to any suggestion that would undermine finding a long-term solution to the problem of fuel tourism - which is detrimental to the environment - and to the distortions of competition in the internal market.
As regards the transitional periods suggested in our proposal, this approach is based on the principle of equal treatment of the old and new Member States and is, therefore, well-balanced in our view. The Commission, however, recognises that this is a political issue which will have to be discussed further in Council.
I would also like to explain that the proposal takes into account the competitiveness aspect of the EU through the suggested modest rate increases. They simply maintain the real value of the minimum levels of taxation by keeping up with expected inflation until 2017. The Commission considers that its own proposal takes all relevant factors into account. It does not consider it appropriate to endorse a less ambitious plan or a more far-reaching one to increase minimum levels of taxation as suggested in Amendments 18 and 25.
As regards Amendments 4 and 10 introducing a new definition of commercial diesel for motor vehicles not less than 3.5 t, I would like to clarify that the suggestion was not included in the original proposal. However, it is one of the main points of discussions in the Council where the Commission will follow the debate, bearing in mind the opinion expressed by the Parliament.
The Commission can accept in principle Amendments 7 and 27 supporting the objective of reducing CO2 emissions. However, it should be remembered that according to the principle of subsidiarity, it is a matter for each Member State to decide the way in which they wish to distribute their tax revenue.
In conclusion, I sincerely hope that Parliament can deliver a supportive opinion on the Commission proposal sending a positive signal to the Council to give a response to the concerns of Member States having problems with fuel tourism and, at the same time, achieving environmental objectives.
Olle Schmidt
rapporteur. - (SV) Mr President, Commissioner, the fact that taxes at EU level are a sensitive subject is demonstrated by the work on this report. I thought that the broad consensus on the need to do something radical in order to cope with the demands of climate change would make it easier to gain sympathy for some really tough proposals. That was not how things turned out.
Of course I can understand Mrs Rühle's criticism of the level of ambition, but at the same time the work in our Parliament focuses on reaching reasonable compromises - something the Commissioner also mentioned - which can be implemented throughout our Union. Here I yielded to arguments regarding both the scale of the tax increases and the period of implementation.
Excellent cooperation from my colleagues, Mr Becsey and Mr Rosati, led me to realise that, if we were to get a report through at all, I had to adjust the level without the purpose of my original proposals being entirely frustrated. The Commission's proposal was rejected in its entirety. I did not gain everything, but nor did I lose everything. Navigating between the rocks of Luxembourg and the Greens was not an altogether simple matter.
Emissions from transport are increasing substantially. We must do something about that. The fact that the EU Member States are competing with different levels of tax on diesel is therefore neither reasonable nor right, as the Commissioner correctly indicates. No one can think that it is good for the internal market that giant lorries should make long detours in order to fill up with cheap diesel in places such as Luxembourg. This so-called fuel tourism is not only bad for the environment, it distorts competition as well. Besides, it leads to losses of tax revenue. Moreover, there is no reason to have separate taxes on unleaded petrol and diesel.
So a compromise was reached here, which got more or less unanimous support in the committee. The minimum taxes on diesel are raised more slowly than proposed by the Commission, from 302 euros per 1 000 litres at present to the same level as the tax on unleaded petrol, 359 euros per 1 000 litres, by 2015. The Commission wanted to see an increase already in 2012.
Latvia, Lithuania, Poland, Bulgaria and Romania would be given until 1 January 2016 to introduce the higher minimum tax. The Commission wants to raise the minimum tax to 380 euros per 1 000 litres by 2014. In order to avoid further distortion of competition, the committee considers that those countries which have tax rates of over 400 euros per 1 000 litres on diesel and 500 euros per 1 000 litres on unleaded petrol should not raise their tax rates on these fuels before 2015.
Mr President, Commissioner, clearly this is a very sensitive question, in particular having regard to subsidiarity. Nevertheless it is a possible way forward towards increased convergence of tax levels. At the same time, we know that inevitable environmental demands will exert an influence on future assessments of the use of financial controls.
To those who do not think I have been sufficiently tough in my demands and that I have chipped away at the level of ambition I will say: in substance, I am with you. We should have agreed on higher levels and shorter implementation periods, as the Commission and the Commissioner have said, but the EU today is not the same EU as it was only five years ago - happily, I would add.
The economic preconditions for harmonising taxes are not the same as they were. If we are to tackle cross-border emissions, we must find reasonable compromises with which everyone can live. We must all realise that.
Besides, I would add that many of the old Member States merit criticism since they have not followed decisions on tax increases taken previously. Purchasing power and inflation considerations have also been taken into account in the committee's conclusions.
The price of oil is currently hitting new records. I last heard on the news that it was close to 110 dollars a barrel.
Now there is broad agreement on gradual tax convergence which I also hope the Commissioner sees - at least in the committee - and I hope to get the support of my colleagues in the House tomorrow, broad support so that we can get a report that can serve as a basis for further work.
Zsolt László Becsey
on behalf of the PPE-DE group. - (HU) Thank you, Mr President. I congratulate the rapporteur, Mr Schmidt, on his excellent work. I believe today represents a breakthrough, as we have managed to hammer out a common parliamentary position on a broad consensual basis. I think it is important to preserve here in plenary the common voice we found in our committee. It is a success because we managed to set a minimum and maximum rate of excise duty to meet anti-inflationary objectives but ignored the idea of abolishing regulation in its entirety. It is better to have an opinion than not to provide one at all, which would leave only the Commission proposal on the table. It is a success because everyone is sacrificing something. Countries with high rates of taxation are ready to freeze their current high rates in the interests of convergence, while low-rate countries are willing to accept some increase relative to the legislation currently in force in relation to diesel.
The biggest sacrifice in this regard is being made by the newly acceded Baltic and Balkan states, as prices and incomes in these countries are lower and they have taken on a huge challenge in terms of inflation and competitiveness, and also in the social sphere, particularly in the run-up to introducing the euro. It is a success because it would halt Parliament's request show, its 'cherry-picking'. By the end of 2015 everyone would fall within the proposed band, and there would no longer be a whole series of inexplicable individual exceptions. This will enable us to reinforce the gravitas of European legislation. I think discipline is important, and we therefore ask the Commission to provide an interim report on compliance in 2010, to check whether the adjusters are actually adjusting or merely dissembling. It is a success because the Council will see that there is a way to achieve the desired convergence, while the Commission will grasp Parliament's philosophy, namely minimum and maximum rates, with the key point being to reduce rather than induce inflation. It can reflect on this in future, too, when putting forward the scheduled Commission proposal on excise duties. Thank you for your attention, Mr President.
Dariusz Rosati
on behalf of the PSE Group. - (PL) Mr President, the Commission's proposal on taxation of unleaded petrol and diesel oil is aimed at limiting the excessive use of fuel in transport and thus reducing environmental pollution.
The Commission also hopes that its proposal will assist in reducing the differences in the excise duty rates imposed by individual Member States, thus contributing to creating more equal conditions for competition on the single market. In general, these aims are desirable and merit support. At the same time, however, the Commission's proposal contains solutions that may have negative implications for the economies of the Member States. The former include: additional increases in the cost of fuel and increased inflation, higher costs and a reduction in the competitiveness of European enterprises, and a reduction of the purchasing power of households. These implications may be particularly noticeable when oil prices on the world markets are exceptionally high, as is the case at present. In addition, the Commission's proposals are such that the main burden of adjustment to the new rates would have to be borne by the least developed Member States of the Union, which is a matter of great concern: hence the amendments proposed in Mr Schmidt's report, which are aimed at minimising such negative implications, whilst not undermining the main aims of the Commission's proposals.
In the framework of the compromise reached between the main groups, we call for the introduction of three main changes to the Commission's initial draft. Firstly, we propose reducing the target minimum rate of excise duty on fuel from EUR 380 per 1 000 litres to EUR 359 per 1 000 litres. Secondly, we propose a two-year extension of the transitional period for introduction of the new rates in the new Member States, taking it to 2016. Thirdly, we propose imposing a requirement whereby the Member States that currently impose the highest excise duty rates on fuel would undertake not to raise them before 2015, thus facilitating the process of harmonising excise duty rates.
Mr President, Commissioner, I should like to emphasise that reaching a compromise was no easy task. It called for concessions and a display of good will on the part of all those who participated in discussions within the Committee on Economic and Monetary Affairs. I should like to take this opportunity to thank Mr Schmidt for his hard work on this compromise and congratulate him on the successful outcome. Clearly this compromise does not fully satisfy everyone involved, but it does represent an attempt to reconcile a range of aims and points of view. It also represents a step forward along the way to reducing differences in rates of excise duty within the Union. I call on the Members of the House to support this compromise and adopt the Schmidt report.
Dariusz Maciej Grabowski
on behalf of the UEN Group. - (PL) Mr President, the President-in-Office of the European Union and the Commissioners tend to begin their interventions with declarations on the protection and support of economic freedoms, freedom of competition and SMEs. The transition from declarations to details generally involves reports similar to the one we are debating today, however.
The report proposes imposing a single rate of excise duty on all Member States and harmonisation of prices, on the pretext of making things more straightforward, easier and fairer. This is taking place against the background of a premise considered a priori to be correct, namely that the best solution for the Member States of the European Union is a single tax system, a single monetary system, a single system for certification and marketing, a single regulatory production limits system and so on.
The proposal states that there are no differences in the cost of fuel supply within the Union, regardless of distance from sources of supply or labour costs. All this is simply untrue. I should like to pose the question as to what economic freedom and freedom of competition within the European Union actually mean. Should we not be referring instead to economic compulsion and force? Is it not the case that a single fuel price eliminating all competition is the ideal solution for multinational fuel enterprises to the detriment of consumers and small enterprises? Is it not the case that a single fuel price favours highly developed countries over less developed ones? Finally, if the Union adopts the aforementioned report, harmonising fuel prices under the slogan of unshackling enterprises and countries, will this not amount in fact to shackling them anew by way of taxation? Worse, will it not simultaneously drive them barefoot into poverty? We shall be voting against the report.
Cornelis Visser
(NL) Mr President, this is the first time that I have spoken in plenary. I hope to be able to represent the interests of the Dutch citizens of Europe here both now and in the future.
There was much negotiation before the drafting of this in-depth report by Mr Schmidt. I am glad that the rapporteur and the other groups have finally reached this compromise. The Commission proposal seeks to raise the excise tariffs in stages and so reduce the difference between the Member States.
The environmental argument has a role to play, but I believe that the increase in fuel prices is already a sufficiently motivating factor. Moreover, the Commission uses distortion of competition as an argument for raising the minimum excise rate on diesel for professional use. I am astonished that fuel tourism is used as an argument for raising the minimum excise on diesel for professional use, as this argument is excessively strong. Fuel tourism is a marginal phenomenon in the transport industry, with little influence on mutual competitive positions and the functioning of the internal market.
The Commission proposes a sharp increase in the minimum rate, to 380 euro per 1 000 litres. I believe that such an increase in conjunction with the already extremely high fuel prices will have too great an impact on the consumer's purse and on inflation. The EP's committee eventually settled on an increase to 359 euro per 1 000 litres by 1 January 2015. The Netherlands is already over this target.
There is one more thing. The transport sector is rightly complaining that the steadily increasing excise is driving fuel prices steeply upwards. The Commission proposal on the harmonisation of diesel excise has no upper limit. Differences would thus continue to exist. Parliament believes that the Member States must freeze the excise tariff on diesel at 400 euro per 1 000 litres until 1 January 2015.
Finally, I hope that when the finance ministers make their decision they will give priority to the interests of the consumer as regards purchasing power and limiting inflation.
Elisa Ferreira
(PT) Mr President, Commissioner, this report deals with a highly sensitive matter of European economic policy, namely taxation, as it covers special taxes on petrol and gas oil used in commercial transport. These taxes are an important source of tax revenue for many Member States. However, the lack of viable alternatives for fuelling the commercial goods transport fleet means that fuel prices are a strategic factor in the competitiveness of many countries.
The recognition of Member States' freedom to impose special consumption taxes is not in doubt. However, as these taxes directly affect the prices of goods sold, excessive differences have a direct impact on the functioning of the internal market. As has already been mentioned, they also lead to cross-border movements and environmental impacts caused by these movements.
The compromise reached in the Committee on Economic and Monetary Affairs is truly a compromise and I should like, in that regard, to praise the work of all the shadow rapporteurs, and in particular the main rapporteur, Mr Schmidt. I cannot ignore the fact that some would like the minimum level to more clearly reflect our prevailing environmental concerns. However, I personally doubt that, given the current level of oil prices, the reinforcement of this kind of message by means of taxation is necessary. The choice has therefore been made to bring the minimum and maximum levels of taxation closer, which, by partly sacrificing these environmental concerns in the opinion of some people, will allow the distortions of competition due to taxation to be reduced. A major effort has been made and we hope that this will receive due recognition from the Commission and the Council and that it will allow further progress to be made on taxation within the European Union.
Astrid Lulling
(FR) Mr President, if Mrs Kauppi does not arrive she is allowing me to use her two minutes, since she is hosting an important dinner-debate.
Mr President, ladies and gentlemen, the report by our Liberal colleague Olle Schmidt relates to a new confrontation between the House and the European Commission, which has proposed an unjustifiable increase in indirect taxes. This proposal was made by a Commissioner that I feel has completely lost touch with economic reality. Mr Kovács suggests a considerable increase in the minimum rates for unleaded petrol and gas oil. In view of the record inflation, a cause of great concern to the European Central Bank, and the economic downturn we are currently witnessing, it seems to me that this is a particularly bad time to increase the excise duty rate on gas oil and fuel oil.
Personally, I must say that I would simply have rejected this uninspiring proposal by the Commission, but majority situations being what they are in the House I was unable to do so. I support the compromise reached by the EP's main political groups as I feel it constitutes an exercise in damage limitation.
The gradual increase of minimum rates for diesel to 359 euro for 1 000 litres until 2015 and a freeze on minimum rates for the same amount of unleaded petrol, as stipulated in the compromise, are clearly below the levels proposed by the Commission. The Commission was, in fact, suggesting 380 euro for both diesel and unleaded petrol by 2014. The rapporteur wanted to go even further in his report and was seeking minimum levels of 400 euro. I welcome the willingness to compromise on the part of our rapporteur, who brought the rates down during the discussions on his report in the Committee on Economic and Monetary Affairs.
The real meat of this report is to be found in Amendment 19, in my opinion. Here we require the Member States, now applying exorbitant excise duty of over 400 euro for 1 000 litres of diesel and 500 euro for 1 000 litres of unleaded petrol, not to increase these rates any further until 2015. Therefore, without going so far as to introduce maximum rates in the proposal, for the Commission has never had the courage to propose these, we are at the very least expressing the desire for price alignment.
Mr President, there is only one way to ensure harmonisation of excise duty rates in Europe: introducing maximum and minimum rates at the same time. It serves no purpose to continue to increase minimum rates and make no effort to curtail the enthusiasm of the Member States that insist on applying extremely high rates.
Finally, if you will allow me, Mr President, I would like to make a point of order. I want to ask the Commissioner, who claimed we support his proposal, whether he lives on another planet, because we do not in fact support his proposal.
Margaritis Schinas
(EL) Mr President, now that inflation in the euro area is at its highest historical point and the price of oil has reached USD 110 dollars a barrel, the European Parliament will tomorrow raise indirect tax on fuel. If this is not a joke, it is certainly aimed at making the readers of Friday's papers smile. I think that we are sending the wrong message at the wrong time. We are demonstrating that we do not understand how society operates.
Furthermore, my delegation will not support the compromise; we are opposed to the bully-boy tactics of six Member States that already have high taxation, forcing all the others, through the Commissioner, Mr Kovács, to raise prices on the pretext of petrol tourism. I cannot justify that to my voters. Instead of carrying out such experiments, let us turn to other policies that benefit the environment. We must avoid such tax-raising acrobatics.
Atanas Paparizov
(BG) My country has made great efforts to increase the excise tax over the recent years and the taxes rates for lead-free gasolene have grown from EUR 254 in 2004 to EUR 350, while those for diesel fuel from EUR 203 to EUR 307 respectively. We have been guided by the willingness to rapidly increase tax rates so that to reduce the inflationary effect in the years to come.
The new proposal of the Commission puts our strategy to question. Therefore the proposal put forward in the report of the Economic Committee sounds reasonable and penalizes countries like Bulgaria and Romania to a less extent.
I hope that the Commission will accept this compromise, although even this proposal generates a serious effort for the Bulgarian economy and it would be an inflationary factor, without producing any effect for the environment because gasolene and fuel oil are not elastic products and they depend on many other economic factors rather than excise taxes.
Ivo Belet
(NL) Very briefly, Commissioner, it seems to me that it would be useful to point out that we need to be cautious in relation to this issue. The public needs to be informed about what is at stake here, because the critics will of course be ready to paint this as a straightforward tax increase, whereas Parliament's proposal is a very modest measure: a real tax increase would be disastrous at a time when prices are so high.
This proposal, which we will hopefully adopt tomorrow, is a good start towards finally putting an end to the distortion of competition that has existed for many years, particularly in the border regions; it is also good for the environment. Commissioner, Mr President, ladies and gentlemen, my second comment is that we are counting on ourselves, and the European Commission in particular, to continue playing a very proactive role in the development and promotion of environmentally-friendly fuels, in other words implementing policies that will help us to get rid of fossil fuels, petrol and diesel.
Zbigniew Krzysztof Kuźmiuk
(PL) Mr President, I should like to draw attention to three issues. Firstly, it seems that the price of oil will not fall below USD 100 per barrel in the future, which will result in a continuous rise in the price of fuel. It is only thanks to the weakness of the American dollar that drastic rises in fuel prices in Europe have been avoided. We cannot, however, expect the United States to wish its currency to be weak forever. In the light of this situation, the proposal to increase excise duty rates in the European Union over the coming years seems to take no account whatsoever of economic reality.
Secondly, per capita GDP in the new Member States is lower than in the older ones, as is the level of personal income. It will therefore only be possible for the new Member States to harmonise the tax burden once a comparable level of personal income has been attained.
Finally, pursuant to the principle of subsidiarity, the Member States should enjoy greater freedom as regards reducing the tax burden on fuels that are not derived from oil. Such measures would stimulate interest in the use of renewable fuels. They would also help us to reduce CO2 emissions and to fulfil our international obligations regarding environmental protection.
Claude Turmes
(FR) Mr President, I only wish to take the floor briefly to point out that not all Members from Luxembourg are not all cheap petrol junkies. I think that Mr Belet has set things out very well. We must find a compromise with the policies on the problems concerning oil resources and climate change, and strike a balance between the countries and the regions too.
I would just like to inform you that on Tuesday the Luxembourg Parliament debated climate change, and it held a discussion on petrol pump tourism. The vast majority of Members of the Luxembourg Parliament, including members of Mrs Lulling's own party, agree that this phenomenon must stopped locally at least. I thus merely wish to say that Luxembourg as a whole has a completely different stance to that of Mrs Lulling, who represents a minority on this issue, and a very small minority at that.
Czesław Adam Siekierski
(PL) Mr President, it would appear that a single market, along with free movement of goods and services equates to full competitiveness. This is not quite the case, though, as the cost of the means of production, which includes the cost of fuel, has a significant impact on the profitability of production. In fact, at present the taxes on fuel differ even between neighbouring countries, giving rise to so-called fuel tourism in border regions. This activity is not very widespread, however.
It appears reasonable to approximate the rates of excise duty, but the process should be slow and be spread over many stages. Harmonisation of the minimum excise duty rates for diesel fuel and unleaded petrol should also be staggered. We should be guided by the general principle of striving to ensure that taxes and excise duties on fuel are kept as low as possible, to avoid driving up inflation and production costs and increasing household expenditure. This is particularly relevant in relation to the new Member States, where earnings are significantly lower.
László Kovács
Member of the Commission. - Mr President, first of all I would like to thank you for the comments and views expressed during the debate.
Obtaining a positive opinion from Parliament on the Commission's proposal for special tax arrangements for commercial diesel is very important. However, we have taken note that your report is less ambitious compared to the Commission proposal, in particular by not endorsing the revalorisation of the overall minimum tax levels applicable to diesel and unleaded petrol.
I have not lost sight of economic rationale. On the contrary: economic rationale speaks against the extra millions of kilometres and also the extra tons of CO2 and other greenhouse gases which are the result of fuel tourism. I have to take into consideration - and we all have to take into consideration - the growing threat of what climate change and global warming mean for mankind. This threat is even much more alarming than inflation. As far as the proposed increase of excise duty is concerned, it will not generate inflation. It will just keep up with the expected inflation of 2.2% a year until 2017.
While the Commission can accept Amendment 1 in part and Amendments 7 and 27 in principle, we have to formally reject the other amendments. The Commission will not formally amend this proposal. We will, however, endeavour to take the amendments suggested by Parliament into consideration as much as possible during deliberations in the Council. A positive opinion from Parliament will be an important signal of the increasing awareness of the growing negative impact on the environment of transport, which we have to address through fuel taxation.
Olle Schmidt
rapporteur. - (SV) Mr President, thank you for your kind words. I think that thanks are also due to the Commission and our committee secretariat.
I thought at first that the Commissioner did not seem really to accept the committee's views. I can understand that on formal grounds. Now, when I heard the Commission again, I thought I detected an understanding of the notion that politics is politics. I recognise that we could have been more ambitious. The Commissioner uses the phrase 'less ambitious'. Yes, but listen to this debate from left to right and upwards and downwards. All points of view were expressed, and then we had Mrs Lulling sitting in the middle. Commissioner, it is on the basis of political reality, as you are indeed aware, that we had to formulate a report and a proposal which will land on your desk. Now a report from the Committee on Economic and Monetary Affairs will arrive, let us hope tomorrow, which will not go entirely your way and which you cannot accept in all respects, but it will be a report.
Finally, I would like to say to the Commissioner that I nevertheless believe we have made progress - if we get a positive result tomorrow - in ending the confrontation which has taken place on these matters between the committee, Parliament and the Commission, and the Council too. Just as you say, we need to take action on fuel tourism for the sake of the internal market. That is quite correct, but we must also prepare drastic and forceful measures for the environment. There must be an understanding of such measures throughout our Union, and I believe that we have succeeded in finding the right balance.
Astrid Lulling
(FR) Mr President, I wish to ask for the floor on a personal matter. Mr Turmes called me a junkie. I feel this is an insult to me and I call on him to withdraw his remark.
In relation to the matter in hand, I can firmly state that my party and my government fully support the compromise proposed by our rapporteur, to which I made a substantial contribution. Mr Turmes, moreover, seems to forget that gas oil is currently less expensive in Belgium than in Luxembourg and that any petrol pump tourists there may be are not heading for Luxembourg, but for Belgium at this point in time.
President
Very well. We note what Mrs Lulling has said, and I am sure that the statements made in this House will be clarified.
The debate is closed.
The vote will take place on Thursday, 13 March 2008.
