Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context

Question 162: To ask the Minister for Finance if his attention has been drawn to proposals emanating from the EU that the duty conditions associated with agri-diesel are to be changed; and if he will veto any changes emanating therefrom. [17614/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The taxation of energy products is to a certain extent harmonized at EU level. Directive 2003/96/EC known as the Energy Tax Directive (ETD) refers. The current ETD provides for minimum excise rates of taxation for energy products based on the volume of a product released for consumption. Member States must respect the minimum rates and not tax products below those rates, but are free to set higher rates for individual fuels as they see fit. The current Irish national rates are generally well above the EU minimum rates. The aim of the Commission's proposal is to revise the ETD to bring it in line with wider EU climate change and energy policy to which all Members States have signed up. Ireland broadly supports the principle of the proposal and welcomes the introduction of the carbon tax into the EU minimum rates; it will serve to lessen competitiveness concerns arising from Ireland being a lead country in the area of carbon taxes.

The Commission's proposal essentially involves a provision for energy taxation to consist of two components, CO2-related taxation and general energy related taxation. The EU minimum rates would no longer be based on the volume of the product, but instead be a combination of the CO2 and energy contents of the product. In relation to fuel for uses covered by Article 8 of the ETD (which includes the use for agriculture), as with other fuels covered by the ETD, there would under the proposal be a change to how the minimum rate is calculated i.e. the split in CO2 and energy content. It is also proposed to increase the EU minimum rate from 2013. However, the revised minimum rate would remain below our current national rate. It should be noted that discussions on the Commission's proposal are at a very early stage. Ireland, as well as a significant number of other countries, has reservations with some of the specific technical and administrative provisions the Commission has included in its proposal.