EU energy tax deal on edge

European Union ministers meeting in Madrid on Thursday are unlikely to agree to introduce greater co-ordination on taxes for energy products as EU states are still split on several issues, officials said on Wednesday.

The finance ministers, meeting ahead of this week’s EU summit in Seville, will also take stock of the fact the EU has made little progress in making Switzerland agree to share information on savings held there by EU residents.

The European Commission, the EU’s executive arm, proposed in 1997 to introduce minimum EU tax rates on coal, natural gas and electricity, which at present are set freely by EU governments.

The draft measures, which EU leaders want approved by the end of this year, would also gradually increase existing EU minimum tax rates on mineral oils to encourage greater energy efficiency for the benefit of the environment.

But EU ministers have clashed while trying to introduce a wide range of exemptions for particular products or sectors, making it unlikely the Madrid meeting can produce a deal.

“It does not look at all as there will be agreement at this meeting,” Jonathan Todd, spokesman for European Taxation Commissioner Frits Bolkestein, told a news briefing.

On savings tax, the Commission started formal negotiations with Berne on Tuesday only after the EU agreed to begin talks on four other dossiers Switzerland wants to discuss.

To crack down on tax evasion, the EU wants to introduce measures that will allow automatic exchange of information on savings held in the 15-nation bloc. But some member states refuse to give up their prized banking secrecy unless other major financial centres, especially Switzerland, do the same.

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