EU taxation of jet fuel moves a step closer, EC to make July move: FT

London (Quantum Commodity Intelligence) - Plans to introduce an EU-wide tax on jet fuel have moved a step closer, according to the Financial Times Tuesday.

European Union finance ministers backed the proposal, in general, at a meeting in Lisbon at the weekend, the newspaper reported, citing officials.

In July, the European Commission (EC) will propose a big overhaul of its energy taxation directive, replacing two-decade-old regulations.

Currently, the aviation and maritime sectors are exempt from the taxation policy of the EU, as part of the 2003 Energy Tax Directive.

Valdis Dombrovskis, EU vice-president for the economy, said the directive was outdated and ministers expressed the "right political momentum to make changes."

However, there was less consensus on extending the levy to include bunker fuel.

The 27 EU member states would need to unanimously agree to the legislative change before it could be introduced, unless the European Commission can demonstrate environmental concerns are grounds for qualified majority voting.

In a research paper last year, lobby group Environment & Transport noted that Malta and Cyprus rely almost entirely on air links and oppose aviation taxes.

"The EU27's smallest 13 emitters account in fact for just 10% of intra-EU27 fuel burn/emissions while the top 6 EU27+ emitters – Germany, Spain, Nordics, Benelux, France and Italy – account for 72%," the research paper noted.

Some EU countries have led the charge to end tax exemptions for jet fuels, and the Netherlands has promised to introduce a national aviation tax in the absence of an EU-wide agreement.

Other tax breaks, such as red diesel for agricultural use, could also be axed.