EU Commission urges Member States to act on post-crisis finances by shifting taxation to polluting sectors

EU Commission urges Member States to act on post-crisis finances by shifting taxation to polluting sectors

Last week, the European Commission published the Country Reports – a detailed Member State by Member State assessment in the context of the European Semester.  It concludes that EU countries should exploit the potential of Environmental Fiscal Reform (EFR). The bloc’s average of 6.3% of environmental tax take (in terms of total tax revenue) in 2014 was short of an indicative 10% goal set in 2011.

GBE welcomes Brussels’ calls on Member States to fully reap the benefits of green taxes. Over the last number of years GBE has made the point that it’s vital that key structural issues pertaining to climate and energy are on the agenda of Finance Ministers, as main players in the European Semester. “It thus provides an important lever for pushing laggard countries to step up”, concludes Constanze Adolf, GBE’s Executive Director. The Commission asks Hungary and Spain to rethink their excise duties on petrol and diesel which rank among the lowest in the EU. Belgium had its knuckles rapped, as the Commission pointed out that, “Despite past measures to further align the tax base for company cars to CO2 emissions, private use continues to be heavily subsidised.” Portugal and Ireland were urged to reform their favourable treatment of diesel.

“EFR should support inclusiveness and macroeconomic resilience, by a targeted expansion of social spending toward vulnerable groups, for example”, Constanze Adolf said. “Especially these days with an ever growing scepticism regarding the EU, it is all the more urgent to close the chapter of a Semester as an intransparent elite tool and to support its transformation into a powerful and effective instrument which includes stakeholders at all levels.”

The next month will be crucial for a results-oriented, innovative policy that will develop the 2017 Country-Specific Recommendations. Please see GBE’s recent publication of shadow country reports for further information.

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