Reduced taxation on fossil fuels: easy and powerful tool to restore balance between consumers. Recent EU decision on differentiated rates in the UK

In a recent decision adopted by the Council on 2 March 2015, the United Kingdom has been authorised to apply reduced levels of taxation on gas oil and unleaded petrol which are supplied as motor fuel to road vehicles.

 

The measure, proposed by the UK, examined by the European Commission and backed by the Council, aims to restore the balance for local fuels consumers faced with higher prices than the rest of the UK consumers. As explained in the decision, "the price difference is due to additional per unit costs induced by the geographic location of those areas, their low population numbers and the delivery of relatively low volumes of fuel."

 

This decision is taken in accordance with the provisions of Article 19 of Directive 2003/96/EC on the taxation of energy products and electricity. Under that provision, certain criteria for the granting of exemption are set, such as conformity with the functioning of the internal market, the need to ensure fair competition and the compatibility with Union's health, environment, energy and transport policies. It must also be compatible with the rules on state aids and do not exceed a six-year duration. The Commission and the Council came to the conclusion that such conditions are met in the present case.

 

The former European Commission proposed in a revision of the energy taxation Directive and put forward a proposal in April 2011, aimed to update the taxation criteria for energy Products (e.g., integration CO2 emissions and energy content). In the recent Energy Union package adopted by the New European Commission, the review of the Directive is not anymore on the agenda. Consequently, the Directive continues to be the central piece of legislation in terms of taxation of energy Products in the EU.

 

Reference: Council implementing decision (EU) 2015/356 of 2 March 2015, OJEU of 5.3.2015, L 61, p. 24.