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TAXATION: ITALIAN AND FRENCH REQUESTS FOR DEROGATIONS ON DIESEL REJECTED.

On March 12, 2001, the Council authorised Italy and France to apply a differentiated rate of excise duty to diesel fuel used by commercial vehicles until December 31, 2002, on the basis of a proposal from the European Commission. However, the Commission has now indicated that it "does not consider tax measures in favour of the road transport sector, and in particular their extension, wholly consistent with the objectives of Community environment, transport and energy policies and would not therefore propose that derogations for road transport operators be extended beyond 2002".

On May 3, 2002 at the request of Italy and France, and under thereat of Commission action against illegal state aid (similar action was proposed for the Netherlands), the Council declared the measures to refund excise duties to road transport operators compatible with the Common Market. But it limited the validity of its decision until December 31, 2002. Italy and France should therefore notify their aid plans to the Commission to have them assessed under EU rules on anti-competitive state aid. The Commission further considers that the adoption of the Directive on the taxation of energy products, though not releasing Italy and France from their obligation to notify the planned aid, could alter the way in which the compatibility of the state aid contained in the measures planned are examined. Finally, it recalls that "notifiable aid may not be put into effect before the Commission has taken, or is deemed to have taken, a decision authorising such aid".

Italy.

The Italian measure would grant road passenger and goods transport firms operating vehicles whose total actual weight exceeds 3.5 tonnes partial reimbursement of excise duty paid on the total amount of diesel purchased and used in their activities over the course of one year. The amount proposed by Italy is Euro 0.043 per litre. In the case of commercial vehicles whose total actual weight exceeds 11.5 tonnes, a further reduction of Euro 0.017 would also be applied.

France.

The French measure granted road hauliers established in the Community partial reimbursement of the excise duty on diesel fuel, within the limits of a six-monthly quota, in respect of diesel purchased in France. The vehicles eligible were commercial vehicles used for road haulage, registered in a Community Member State, with a gross laden weight of more than 7.5 tonnes. Reimbursement applied to a maximum quota of 20,000 litres per six-month period. For the period 2003/2004, the amount of the reimbursement granted would be fixed at Euro 21.3 per thousand litres of diesel fuel.

Last chance.

The rapid adoption of the Directive on the "taxation of energy products" now represents Italy and France's last chance to keep promises made during the last oil price crisis to sectors consuming large quantities of diesel. The compromise adopted informally on March 20 (see European Report 2761 for further details) takes note of derogations fiercely negotiated by the Member States concerned. Until January 1, 2005, Italy would be authorised to apply a differentiated rate of excise duty to diesel fuel used by commercial vehicles of not less than Euro 370 per 1,000 litres from January 1, 2004 - excise duties currently stand at Euro 403.2139/1,000 litres. France would be authorised until January 1, 2005 to apply a differentiated rate of excise duty to diesel fuel used by commercial vehicles of no less than Euro 380 per 1,000 litres from March 1, 2003 - excise duties currently stand at Euro 391.90/1,000 litres. In this same context, the Council is still examining the Commission proposal on commercial diesel which should definitively set excise duties. Were such a provision to be introduced, the Commission would clearly not then tolerate any more derogations.
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Publication:European Report
Geographic Code:4EUIT
Date:Mar 29, 2003
Words:626
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