Commission: Proposal to exempt islands from the energy tax – The benefits – 2024-03-01 06:27:51

As the EU’s hard-fought battle over energy taxation continues, with the Commission’s proposal currently hitting a snag, the Belgian presidency has tabled a compromise proposal to strike a deal ahead of June’s EU elections.

According to a draft proposal revealed by Reuters, European Union countries are negotiating exemptions to a proposed tax on polluting jet fuel for islands, in a move that could benefit countries such as Greece, Ireland, Cyprus, Malta and Spain.

It is recalled that the European Commission has proposed revising energy tax rules in 2021 to make them more climate-friendly, including phasing in fuel taxes for flights within the 27-nation bloc, which currently escape EU-wide levies .

Belgium’s compromise proposal showed that countries are now negotiating softer rules for islands – both island nations and countries including island territories – that depend on aviation and shipping for transport and trade.

Exemption until 2032

The compromise plan would exempt the islands from jet fuel tax until 2032. For other countries, a minimum EU tax rate would apply from 2028 and rise gradually, while EU member states would also have the option to introduce the their own national contributions immediately after the adoption of the policy.

The changes are aimed at winning support from island nations that have expressed concerns that the policy will hit their economies particularly hard. The islands will also get some exemptions from the EU’s minimum shipping tax rates, according to the compromise plan.

Changing EU tax policy is incredibly difficult because it requires unanimous approval from all EU countries – meaning any government can block it. Excluding islands could, however, hamper efforts to reduce greenhouse gas emissions.

Flights to and from the islands account for around 22% of total fuel use by flights within the EU, Transport and Environment reports.