Wopke Hoekstra aims to enact tax reforms that encourage Europeans to adopt cleaner, greener choices, particularly in transportation and heating. However, he is likely to encounter the same blockades that have hindered progress on climate reforms for years.
The EU’s climate commissioner has committed to aligning taxation policies with climate objectives and has announced the European Commission’s goal of achieving a 90% reduction in emissions by 2040. Hoekstra emphasized in a written response to MEPs that “taxation serves as a crucial pricing strategy to drive climate initiatives,” stating that it can stimulate transformation by prompting both individuals and businesses to make more sustainable decisions.
Hoekstra, who formerly served as the Dutch finance minister, was appointed by European Commission president Ursula von der Leyen as the new commissioner for climate and taxation after Frans Timmermans returned to national politics. He faces a challenging confirmation hearing scheduled for November 7, where he must convince members of the European Parliament’s environment, industry, and economics committees of his qualifications.
Meanwhile, an EU Council working group was set to meet to discuss Hungary’s renewed efforts to resolve the ongoing deadlock among member states regarding the reform of the Energy Taxation Directive. Previous attempts to reach a consensus on the final aspect of the ‘fit for 55’ legislative package—designed to fulfill the EU’s 2030 emissions reduction targets—have been met with pushback. Most notably, Hungary’s proposal to delay establishing EU-wide minimum tax rates for kerosene and bunker oil used in aviation and shipping until 2049 has provoked outrage among climate advocates.
In a recent compromise proposal dated October 18, Hungary indicated that “some delegations are not prepared to accept the abolishment of mandatory tax exemptions currently enjoyed by the aviation and maritime sectors” and proposed to set a review for 2035 instead. An insider noted that discussions were inconclusive and that further technical and political negotiation would be necessary to reach an agreement.
Hoekstra appears determined not to overlook the significance of taxation in the aviation and maritime industries. “I will not shy away from underscoring the importance of taking action in these sectors,” he stated. He also pointed out the misuse of zero VAT rates, particularly in international air and maritime transport, which fail to account for environmental consequences.
The challenge for Hoekstra, assuming he is endorsed by the European Parliament, is that taxation policy remains primarily in the hands of national governments under EU treaties. Consequently, any legislative efforts at the EU level require unanimous agreement from all 27 member countries.
Hoekstra affirmed that the Commission would propose a legally binding target for 2040 to achieve a 90% reduction in greenhouse gas emissions relative to 1990 levels, which translates to cutting current emissions to about one-seventh of today’s figures. With an already established target of reducing emissions by 55% by 2030, this initiative would necessitate substantial cuts in greenhouse gas emissions over the next decade.
To realize these ambitious goals, the commissioner hopes to foster consensus within the EU Council while maintaining a “high level of ambition” in the energy taxation reform efforts. Jo Dardenne, who leads aviation initiatives at the NGO umbrella group Transport & Environment, criticized the persistent misalignment of transport taxation with EU climate policy. “From subsidies for polluting cars to the insufficient taxation of kerosene, the high-polluting activities have evaded accountability for their climate impact,” she remarked.
Dardenne suggested that government discussions on energy tax reform should address this disparity. “Revenues from a kerosene tax could be reinvested in cleaner transportation alternatives, such as rail, or contribute to the decarbonization of the aviation sector itself,” she added.
Photo credit & article inspired by: Euronews
