Removing the requirement for unanimity in decision-making in the field of taxation would go a long way to facilitating the European Union’s ability to show leadership in reaching the EU’s commitments towards achieving the SDGs while proactively engaging in multilateral discussions on global trade.
The United Nations Sustainable Development Goal on the oceans, seas and marine resources (SDG 14) explicitly calls for the prohibition of harmful fisheries subsidies that contribute to overcapacity and overfishing, and for the elimination of subsidies that contribute to Illegal, Unreported and Unregulated (IUU) fishing by 2020.
The European Union and its member states currently subsidise their fishing industry through several instruments, including fuel tax exemptions. Subsidies that lower the cost of fishing, such as fuel subsidies, are universally considered as capacity-enhancing and environmentally harmful. In European member states, the main vehicle for fishing fuel support is the EU-wide tax exemption on fuel used for fishing activities. This exemption is stipulated in Article 14 of the Energy Taxation Directive (Directive 2003/96/EC). A 2013 study conducted for the European Parliament’s Fisheries Committee estimated that between 2002 and 2011 the EU provided the equivalent of €1.05 billion in fuel subsidies through this tax exemption alone.
Unanimity in decision-making in the field of taxation prevents the phasing-out of the fuel tax exemption for fisheries and thereby limits the choices available to the Commission and member states in responding to external crises. For example, following a rapid and significant increase in fuel prices in 2007, which threatened to doom many European fishers to an involuntary cessation of fishing activities, the option to (temporarily) lower or remove tax on fuel used for fishing was not available to decision-makers – since fishing fuel was tax exempt anyway, regardless of fluctuations in oil prices. The only option left to the European Commission in the short term was to amend the guidelines for direct state aid in the field of fisheries. The de minimis assistance ceiling was raised from 3.000€ to 30.000€ per beneficiary over any period of three years – and the new ceiling remains in force to this day. This state aid may be used to subsidise operating costs, among which fuel costs are one of the most relevant. While fuel subsidies (direct or indirect) are undesirable due to their capacity-enhancing effects, this example illustrates how an inflexible approach to decision-making limits the courses of action available to decision-makers when faced with crises.
Removing the requirement for unanimity in decision-making in the field of taxation would go a long way to facilitating the European Union’s ability to show leadership in reaching the EU’s commitments towards achieving the SDGs while proactively engaging in multilateral discussions on global trade. The European fishing fleet has never been so profitable overall, and fuel prices are relatively low at the moment. The only remaining major hindrance to EU leadership in phasing out its fuel tax exemption lies in the unanimity rule.
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