5. We have given further consideration to the following on the basis of a
supplementary Explanatory Memorandum. We maintain our opinion[8]
that it raises questions of legal and political importance, but now make no recommendation for its
further consideration:--
H M Customs and Excise
(17711)
11452/96
COM(96)549 |
(i) Commission Report under Article 8(6) of Council Directive
92/81/EEC, on the situation with regard to the exemptions or reductions for specific policy
considerations as set out in Article 8(4) of Directive 92/81 and concerning the obligatory exemption
of mineral oils used as fuel for the purpose of air navigation other than private pleasure flying
and the exemptions or reductions possible for navigation on inland waterways other than for private
pleasure craft as set out in Articles 8(1)(b) and 8(2)(b) of the same Directive.
(ii) Proposal for a Council Decision authorising Member States to continue to apply to
certain mineral oils, when used for specific purposes, existing reduced rates of excise duty or
exemptions from excise duty, in accordance with the procedure provided for in Article 8(4) of
Directive 92/81/EEC. |
| Legal base: |
The legal base for the Directive is Article 99; the draft Decision, to
be made under Article 8(4) of the Directive, requires unanimity. |
Background
5.1 When we first considered this document on 15 January, we asked the Exchequer
Secretary to the Treasury (Mr Oppenheim) for further information, including the implications of the
proposals for the commercial aviation industry, and the legality of imposing tax on commercial
aviation carriers from third countries.
5.2 His first response of 18 February did not provide us with the information we
needed to come to a conclusion. He did not supply us with a Cost Benefit Analysis, either of the
proposals as a whole or of the implications of the proposed Decision to withdraw exemptions for fuel
used in private pleasure craft, in private pleasure flying, and in the operation of lighthouses.
On the contrary, despite the fact that the initial Explanatory Memorandum had promised that a Cost
Benefit Analysis would be supplied "as soon as possible", the Minister now told us that
there was no information available at present on which to base one, and that in any case he did
not intend to produce one because Treasury Ministers had formed the view that the UK should resist
the abolition of the derogations. And he did not provide satisfactory answers to our other specific
questions. We therefore continued to withhold clearance, and again asked for further information.
The present position
5.3 The Minister wrote to us again on 18 March, covering a Supplementary Explanatory
Memorandum for the proposed Council Decision referred to in the original Explanatory Memorandum.
He tells us that "the UK's recent request for a derogation to permit the implementation of the
reduction in duty on low sulphur diesel announced in the Budget has now been added to the proposal
by the Commission". He therefore asks for urgent clearance for the Decision.
5.4 He also provides further information in response to our questions. On the issue
of exemptions for fuel used in pleasure craft and private pleasure flying, he says that it is of
long standing and "has the benefit of simplicity"; he wishes to retain the flexibility
to propose changes if he considers it appropriate. On the taxation of aviation kerosene used by
international commercial carriers, he points to the international agreements entered into under the
auspices of the International Civil Aviation Organisation (ICAO), and argues that progress can only
be made through that body. And he "understands, purely informally" that the proposal to
tax fuel for non-pleasure craft on inland waterways may be dropped.
Conclusion
5.5 We are now content to clear the revised Council Decision on the basis of the
information supplied to us, though we should be grateful for a copy of the revised text as soon as
possible. As regards the broader issues raised in the Commission Report, the specific proposals will
need to come forward for Scrutiny individually in due course.
8.(17711) 11452/96; see HC 36-xi (1996-97), paragraph 4 (15 January 1997). Back
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