Isramart: Commission explores carbon tax

Isramart news:
The European Commission is studying the possibility of introducing a carbon tax with the aim of giving farmers an incentive to use the least polluting fuels and reducing household energy consumption. An internal working paper cited by AFPstates that the objective is to help governments to finance the EU’s plan to combat climate change.

“ONE OF SEVERAL OPTIONS”

The non-finalised working paper – which dates from several months ago – sets a base level tax of €20 per tonne of CO 2. This is merely “one of several options,” said the spokeswoman for Taxation Commissioner Algirdas Semeta, on 1 June.

Energy is already taxed in the EU but agriculture has an exemption. The aim of the possible new ‘green’ taxation is to expand action against climate change to include the transport, construction and agriculture sectors, which account for 60% of the 2.2 billion tonnes of CO 2 and other greenhouse gases emitted annually by the European Union, explains the Commission. Heavy industry and aviation are not concerned because they are covered by the scheme that grants carbon allowances, which are free for the moment but will have to be bought from 2013.

The paper notes that the objective is “to change behaviours and the technologies used”. “Discussions are underway to involve farmers in a carbon tax without placing them in difficulty,” Semeta told the press in Brussels. The new taxation would entail two components: a tax in terms of CO 2 emissions and a tax based on energy content. “Minimum rates will be set at European level and every country will be free, if it likes, to go further,” explained Semeta.

Biofuels would be taxed at the lowest rate and diesel oil, used by farmers, fishermen and professional drivers, would remain more advantageous than other fuels, notes the Commission’s draft. The price of coal will be increased to a prohibitive level.

“There is no question of increasing taxes and this is not a new tax,” assured Semeta.

The EU has pledged to cut its greenhouse gas emissions by 20% by 2020 and to raise to 20% the share of renewable energy in its energy mix. A carbon tax will help governments to “reach their national targets” and “the tax revenues could be used to reduce debt, lower other taxes or compensate for the negative effects of this tax on taxpayers,” states the document.

Minimum taxation rates would have to be set. A debate by the College of Commissioners is scheduled for 23 June. “The timing for presenting a proposal to the member states will be decided at that time,” announced Semeta. “No figures will be tabled on 23 June,” however, explained his spokeswoman.