The German presidency of the European Union will next week ask member-states to agree the broad outlines of a plan to harmonise energy taxes by the end of the year, EU officials have said.
The plan, prepared for a meeting of EU finance ministers on Tuesday, backs European Commission proposals to introduce minimum tax rates for most energy sources and increase levies on mineral oils.
However, the plan is expected to run into opposition from a number of countries, including Spain. Ireland is also expected to oppose the proposals, which require unanimity if they are to be approved.
"Ireland has not been an enthusiastic supporter of the proposed directive," a Department of Finance spokeswoman said yesterday.
However, Germany proposes leaving detailed discussions on the precise tax rates until November, preferring to secure unanimous agreement on the principle of energy tax harmonisation.
"There is a chance that this outline will be agreed next week, but that still leaves so many crucial things to be decided," said an EU diplomat. "The fact is that you won't get some countries to sign up to anything more concrete at this stage. One or two states really do have major difficulties with the whole concept," he added.
To curb greenhouse gas emissions, end harmful tax competition and encourage cuts in taxation on labour, the EU Commission proposed in March 1997 that EU governments increase minimum tax rates on motor and heating fuels and extend harmonised minimum taxes to electricity, coal and gas.
The latest German plan waters down EU Taxation Commissioner Mr Mario Monti's proposals to find a formula to pacify the biggest opponents of the plan. It suggests setting the minimum tax rate for coal and lignite at zero, while most other fuels which do not currently fall under the EU tax regime would have "low positive" rates. Bonn says the exact levels must be negotiated later, after the basic principle has been accepted.
For mineral oils used for heating or motor fuel, the plan underlines that the new rates must be higher than at present, with bigger hikes for fuels with high sulphur content.
Germany is optimistic that its compromise will pave the way to a final agreement by the November meeting of EU finance ministers, when Finland will hold the rotating presidency.
