Environmental taxes and charges in the Single Market
The European Commission has adopted a communication on environmental taxes and charges in the Single Market. With increasing use of such instruments in Member States, environmental policy can be expected to become more efficient. However, there is also a fear that the instruments are not always used in a way compatible with EU legislation. This particularly concerns rules related to the Single Market. The communication explains the legal framework applicable to Member States and clarifies both the possibilities and constraints for Member States to act in this field. It shows that there is considerable room for action by the Member States to use fiscal instruments that respect the obligations of the Treaty on European Union. The communication can thus serve as a guideline for Member States active in this field. The document mainly deals with product taxation, as this is the area most sensitive to internal market aspects. The communication describes which Articles of the Treaty can apply in this field. It also explains the effects of these Articles on the use of levies, including: - If a levy has a clearly positive environmental effect, it may be judged in a more positive way in terms of its effect on other policy areas; - Levies may not be used to discriminate against products from other Member States; - Levies should be in accordance with secondary legislation on indirect taxation, e.g. in the field of energy taxation, where detailed rules exist; - Exemptions from paying the levy, and the way revenues from environmental levies are used, should fulfil rules in the field of state aid. The document specifies when Member States have to inform the Commission of their activities - the so-called notification rules. Such rules exist in the following areas: - State aid; - Technical standards and regulations linked to fiscal measures (Directive 83/189/EC); - National measures taken to transpose Community Directives into national law. As this is a rapidly evolving area, the Commission will closely follow the evolution of the use of environmental taxes and charges in Member States, and their impact on the single market and on environmental policy. Therefore, it will systematically collect experience from Member States on their use of these instruments. The Commission also plans to carry out an evaluation on the economic and environmental effects of their use. The results of this work will be used to draw policy conclusions on the further use of environmental levies at Community and Member State levels.