The EU Energy Tax Directive: overview about the proposed reform, impacts on national measures and state of play

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1 Environmentally Related Taxes and Fiscal Reform Rome, Thursday, 15 December 2011 The EU Energy Tax Directive: overview about the proposed reform, impacts on national measures and state of play A short reflection about essential changes in the proposal of the Commission for the ETD seen from the German government s point of view - Dr. Martin Wielant, Federal Ministry of Finance, Germany 1

A short reflection about essential changes in the proposal of the Commission for the ETD seen

2 Remarks concerning a selection of essential changes in the proposal of the Commission Introduction of a new principle in the energy taxation systems of the Member States: National levels of taxation have to replicate the relationship between the minimum levels of taxation fixed in the ETD for the various energy sources (Art. 4 Para. 3 of the Commission s proposal). Introduction of a new energy taxation system with an energy content element and a mandatory CO 2 -element, both calculated with own minimum tax rates (Art. 1 Para. 2 of the Commission s proposal). Dr. Martin Wielant, Federal Ministry of Finance, Germany 2

energy sources (Art. 4 Para. 3 of the Commission s proposal).

3 Art. 4 Para. 3 of the Commission s proposal Dr. Martin Wielant, Federal Ministry of Finance, Germany 3

4 Objections concerning Art. 4 Para. 3 of the Commission s proposal Less flexibility in the energy taxation system. No step towards harmonisation. Premise: exchangeability of energy products. Lisbon treaty: Choice of the national energy mix by the Member States. Dr. Martin Wielant, Federal Ministry of Finance, Germany 4

No step towards harmonisation. Premise: exchangeability of energy products.

5 Less flexibility in the energy taxation system for MS Fictional scenario: impacts on the taxation for energy products with the same use and the need of a lower tax rate 70,00 60, energy tax in per unit 50,00 40,00 30,00 20, energy product 1 energy product 2 10,00 0,00 current tax rates of a MS new EU-Minima taxes on level of ep 1 fictional scenario: need for lower tax rate for ep 1 => lower tax rate for ep 2! (Tax rates are fictional for the purpose of the example.) Dr. Martin Wielant, Federal Ministry of Finance, Germany 5

product 2 10,00 0,00 current tax rates of a MS new EU-Minima taxes on level of ep 1 fictional scenario: need for lower tax rate for ep 1 =>

6 No step towards harmonisation Recent EU tax rates on motor fuel tax rate in per 1000 litre AT BE BG CY CZ DE DK EE EL ES FI FR HU IE IT LT LU LV MT NL PL PT RO SE SI SK UK EU-Minima Petrol tax rate (most common brand) Diesel tax rat (most common brand) Dr. Martin Wielant, Federal Ministry of Finance, Germany 6

7 No step towards harmonisation EU tax rates on motor fuel w ith Art. 4 Para. 3 of the Commission's proposal tax rate in per 1000 litre AT BE BG CY CZ DE DK EE EL ES FI FR HU IE IT LT LU LV MT NL PL PT RO Petrol tax rate (most common brand) Diesel tax rat (most common brand) SE SI SK UK EU-Minima Dr. Martin Wielant, Federal Ministry of Finance, Germany 7

BE BG CY CZ DE DK EE EL ES FI FR HU IE IT LT LU LV MT NL PL PT RO Petrol tax rate (most common

8 Art. 1 Para. 2 of the Commission s proposal Dr. Martin Wielant, Federal Ministry of Finance, Germany 8

9 Objections concerning Art. 1 Para. 2 of the Commission s proposal Coordination between ETD and ETS. No assistance to reach the climate change and energy targets by CO 2 -Element based on /GJ (in combination with Art. 4 Para. 3 of the proposal) disadvantages diesel powered cars, although diesel contains less CO 2 per driven km than petrol. Rising burden for consumers, economy and administration caused by the introduction of the two elements of taxation, the limitation of the tax exemptions (e.g. Art. 14 and Art. 15 of the Commission s proposal) and the new regulations for biofuels. Dr. Martin Wielant, Federal Ministry of Finance, Germany 9

3 of the proposal) disadvantages diesel powered cars, although diesel contains less CO 2 per driven km than petrol.

10 Coordination between ETD and ETS 20,00 Tax rate CO 2 -element in ETD proposal price for EU Emission Allowances Origin: Information of the European Energy Exchange AG (EEX), Leipzig ( Dr. Martin Wielant, Federal Ministry of Finance, Germany 10

of the European Energy Exchange AG (EEX), Leipzig (http://www.eex.

11 Alternative strategy to update ETD and raise environmentally-related revenues Dr. Martin Wielant, Federal Ministry of Finance, Germany 11

12 Alternative strategy Update the established and well-balanced system of the existing ETD, especially increase the minimum tax rates significantly. Advantages: Simple approach. No fundamental changes in the established and flexible system of ETD. Rising tax rates and revenues in the EU. Rising prices for energy products advance the development of energy efficient products, lead to an incentive to save energy and to avoid CO 2 - emissions. Step towards harmonisation. Decrease of tank tourism concerning diesel and petrol. Dr. Martin Wielant, Federal Ministry of Finance, Germany 12

Rising prices for energy products advance the development of energy efficient products, lead to an incentive to save energy and to avoid CO 2 -

13 Environmentally-related tax reforms and changes in the German fiscal system Dr. Martin Wielant, Federal Ministry of Finance, Germany 13

14 The German ecological tax reform Legal implementation (selection) Stepwise implementation of higher taxes on motor fuels. Introduction of a tax on electricity. Introducing tax reductions because of economic, ecologic and social reasons. Decrease of the contribution rate to the pension system. Impacts Determining factor: The legislation needs a flexible system as the current ETD - to implement a well-balanced system of the different tax rates and to take the different purposes of tax reductions into account. Dr. Martin Wielant, Federal Ministry of Finance, Germany 14

Decrease of the contribution rate to the pension system.

15 Impacts of the ecological tax reform Environmentally related taxes - revenues in Germany re v e n u e s in b n motor vehicle tax energy tax electricity tax total revenues year Dr. Martin Wielant, Federal Ministry of Finance, Germany 15

60 50 40 30 20 10 0 motor vehicle tax energy tax electricity tax total revenues 1 9 9 4 1 9 9 5 1 9

16 Other recent environmentally-related changes in the German fiscal system (e.g.) Revision of the motor vehicle tax in Road charge for commercial road vehicles on motorways and particular state roads since Introduction of new environmentally-related taxes in 2011: - Aviation tax and - Nuclear fuel tax. Dr. Martin Wielant, Federal Ministry of Finance, Germany 16

Introduction of new environmentally-related taxes in 2011: - Aviation tax and - Nuclear fuel

17 Thank you for your attention! Dr. Martin Wielant, Federal Ministry of Finance, Germany 17

18 Further informations about: Aviation tax: Startseite/Publikationen/Monatsbericht d es BMF/2011/04/analysen-und-berichte/b04-Luftverkehrssteuer/Luftverkehrssteuer.html? nnn=true (Information in German) Motor vehicle tax: und Buerger/Mobilitaet und Reisen/Rund ums Auto/Kfz Steuer/Neuregelung Kfz Steuer.html? nnn=true (Information in German) Nuclear fuel tax: ml (Information in German) Charge for commercial road vehicles: gv-toll_node.html (Information in English) Dr. Martin Wielant, Federal Ministry of Finance, Germany 18

nnn=true (Information in German) Motor vehicle tax: http://www.bundesfinanzministerium.de/nn_55228/de/buergerinnen und Buerger/Mobilitaet und Reisen/Rund ums Auto/Kfz Steuer/Neuregelung Kfz Steuer.

19 Annex: Dr. Martin Wielant, Federal Ministry of Finance, Germany 19

20 Scenarios for implementing Art. 4 Para. 3 of the Commission s proposal in tax rates for motor fuels Possible impacts on motor fuel tax rates in Germany due to the Commission's ETD-proposal 0,80 0,70 0,659 0,659 0,714 0,60 energy tax in per litre 0,50 0,40 0,30 0,453 0,359 0,390 0,416 0,453 Petrol Diesel 0,20 0,10 0,00 current tax rates new EU-Minima taxes on petrol tax level taxes on diesel tax level Dr. Martin Wielant, Federal Ministry of Finance, Germany 20

to the Commission's ETD-proposal 0,80 0,70 0,659 0,659 0,714 0,60 energy tax in per litre 0,50 0,40 0,30 0,453

21 Importance of energy taxation in Germany tax revenues für motor fuels (Petrol/Diesel) m Year Dr. Martin Wielant, Federal Ministry of Finance, Germany 21

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