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PRESS RELEASE (Brussels, 28 March, 2007) - The Commission's discussion paper on market-based instruments for the environment published today is too cautious, according to EEB. The largest federation of environmental citizens' organizations in Europe had hoped the paper, on which the Commission has worked for two years, would announce solid environmental tax reform proposals. John Hontelez, EEB's Secretary General, said: "The Commission presents how environmental taxes, compensated with reduced employment taxes, can contribute to climate change policies, reduce transport's environmental impacts, help water and waste policies, and strengthen our economies. But it's failed to announce the big political initiatives we need to make this work. For EEB, environmental fiscal reform isn't simply an option: it's a pre-condition for sustainable development and an indispensable tool to make polluters pay, which is what the European Community Treaty requires". EEB had hoped the Commission would announce a political initiative to stimulate a major EU-wide coordinated shift of the tax focus away from labour and towards the use of energy and environmental goods. It has been recommending this approach to the Commission for almost a year. Hontelez said: "Last week, the Commission organised an impressive Tax Forum to discuss how tax can help environmental policies. Commissioners Dimas and Kovacs both appeared convinced that's the right way to go. Many countries' senior financial authorities' delegates echoed this conviction. But the Commission's failed to show leadership to get the process going." The Commission refers to the need for unanimity on legally-binding EU tax decisions. Some countries, led by the UK, have consistently opposed such decisions. However, EEB had suggested that the Commission undertake an initiative taking account of each EU country's specific requirements on how to compensate environmental taxes by reducing other burdens, to prevent lower-income groups and some industries being treated unfairly. In that proposal, the European Council, in the framework of the Lisbon process, would agree on a 10% shift in tax income in ten years, from labour to energy and environment, and agree on a minimum level of coordination on how to achieve it. Hontelez said: "Basically, the Commission has merely offered its services to EU countries to voluntarily share best practice. This isn't going to make any difference. Many polluting activities are still effectively subsidised because their environmental impacts are not reflected in the price. EEB is concerned that without a major EU-wide initiative this is simply not going to change." EEB has promoted the use of market-based instruments for many years and will play an active part in the Commission's forthcoming discussion. It will question whether companies already in the Emission Trading Scheme will be exempted from environmental taxes. But it will oppose replacing emissions limits (eg for NOx and SO2) with trading schemes.
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