European Union countries are considering a 10-year delay to the introduction of EU-wide taxes on shipping and aviation fuels as they seek to push long-delayed energy tax reforms over the line, a draft document seen by Reuters showed.
The European Commission proposed an overhaul of energy tax rules in 2021 to align with efforts to limit “climate change”. This included gradually introducing taxes on CO2-emitting fuels for flights and shipping within the 27-nation bloc, which currently escape EU-wide minimum levies.
Governments resisted the changes, and are now considering a delay of 10 years in which aircraft and shipping fuels would maintain their existing EU tax exemption, a draft EU negotiating proposal showed.
"In 2035, the Commission should examine the possibility of taxation of air navigation and waterborne navigation and propose amendments to this Directive, where appropriate," it said.
EU countries' negotiators will discuss the compromise at a meeting in Brussels on Friday.
Only small aircraft with a maximum of 19 seats, and boats defined as "private pleasure craft", may face taxes before the 10 years are up, the draft said.
The exemption is designed, "to maintain the competitive position of Union companies," it said.
The EU already applies minimum tax rates to other fuels, such as electricity and petrol used in cars. Climate activists have long called for tax changes to promote so-called cleaner fuels.
But changing EU tax policy is fiendishly difficult because it requires unanimous approval from all EU countries.
Countries with large shipping sectors and those with large tourism sectors have resisted the changes, EU diplomats said.
A previous proposal to temporarily exempt island nations such as Ireland and Malta, and countries with island territories like Spain, also failed to win enough support among governments.
The latest document was drafted by Denmark, which holds the EU's rotating presidency. A spokesperson for Denmark's EU presidency said it aimed for countries to reach a deal on the tax changes in November.
(Reporting by Kate Abnett Editing by Ros Russell)