Topsy-Turvy: The European Court of Justice and Border (Energy) Tax Adjustments – Should the World Trade Organisation Follow Suit?

Critical Issues in Environmental Taxation: International and Comparative Perspectives, Vol. 1, pp. 311-341, 2003

31 Pages Posted: 9 Jan 2013

Date Written: April 12, 2002

Abstract

National environmental priorities, as well as international commitments to reduce the emission of greenhouse gases, have led to the increased use of ‘smart’ energy taxation. In particular in OECD countries, States aim to encourage inter alia the use of renewable sources of energy, through a layered system of taxation. Such system targets the (perceived) less environmentally friendly forms of energy, with a higher rate of taxation.

Competitiveness concerns of such a green taxation regime, would normally be offset by Border Tax Adjustment (BTA). However in the energy sector, BTA is complicated by the fact that one cannot distinguish the method of production from the final product.

The paper employs this dilemma and the way it is tackled in the European Union, as a benchmark for similar taxation applied on a global scale. It lays considerable emphasis on recent case-law, which initially seemed to signal less flexibility on the Border Tax Adjustment side (Outokumpu Oy), and more flexibility on the aspect of quantitative restrictions to trade (PreussenElektra), but was subsequently overtaken by the regulatory intervention of the European legislator. That interplay between negative harmonization (case-law) and positive harmonization (regulatory intervention), is exactly where the WTO and the international environmental community, ought to follow suit.

Keywords: border tax adjustments, BTA, WTO, EU, feed-in tariffs, FIT, Ontario, renewable energy, PreussenElektra, ECJ

JEL Classification: K23, K32, K39

Suggested Citation

van Calster, Geert, Topsy-Turvy: The European Court of Justice and Border (Energy) Tax Adjustments – Should the World Trade Organisation Follow Suit? (April 12, 2002). Critical Issues in Environmental Taxation: International and Comparative Perspectives, Vol. 1, pp. 311-341, 2003. Available at SSRN: https://ssrn.com/abstract=2197683

Geert Van Calster (Contact Author)

K.U. Leuven ( email )

Tiensestraat 41
Bus 3424
B-3000 Leuven, 3000
Belgium

HOME PAGE: http://www.gavc.be

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