A majority of MEPs have voted against the European Commission's proposal to reform the energy taxation system during the European Parliament's plenary session in Strasbourg on 19 April. This involved rejecting the Commission's proposal to increase the rate of tax on diesel to bring it in line with tax imposed on petrol.

The Commission proposed that energy taxation should be linked to CO2 emissions and be based on the energy content of products. These measures would help the EU combat climate change, promote the use of renewable energy sources and support technological change and investment in the green economy according to the Commission.

The Commission proposed that households, the transport sector, small businesses and agriculture become subject to a carbon charge while renewable energy sources would escape this CO2-related tax. Implementing the new tax structure proposed by the Commission would also involve increasing the rate of taxation of diesel to bring it into line with taxation imposed on petrol.

The Parliament rejected the proposed alignment of motor fuel taxation. MEPs recommended that the current energy tax exemptions or reductions for households and charitable organisations should gradually be phased out, but over a long period. It was also recommended that Member States should ensure both that CO2 taxation does not apply to industry sectors that are already subject to the EU emissions trading scheme.

The European Parliament's vote on the reform of energy taxation is a non-binding position which serves as a recommendation to the Council of Ministers. The Council of Ministers in turn must decide unanimously for any changes to take effect.

For full details see http://www.europarl.europa.eu/news/en/pressroom/content/20120419IPR43406/html/Parliament-opposes-phase-out-of-diesel-tax-advantage