The European Commission will propose tax changes, including a carbon border adjustment mechanism, in July to support a European “Green Deal,” according to May 22 remarks by European Commission Executive Vice-President Valdis Dombrovskis.
Speaking at an ECOFIN press conference, Dombrovskis said that Environmental tax measures will be part of a broader legislative overhaul to help the EU attempt to reach an ambitious 55% emission reduction target for 2030.
The tax components will include, in addition to the carbon border adjustment mechanism, revisions to the Energy Taxation Directive.
He said that all agree that green taxation can encourage a sustainable use of resources; reduce waste and pollution; bring economic, social and health benefits; help to broaden the EU tax base; and promote a shift away from labor taxes.
The carbon border adjustment will fight climate change by imposing carbon pricing on imported products to equalize them with domestic products subject to EU environmental regulations. Dombrovskis said that that the proposal will be implemented gradually and will be WTO-compliant. He added that he believes the policy will incentivize more global use of carbon pricing.
Regarding changes to the Energy Taxation Directive, Dombrovskis stated that there is “an acknowledgment that we will need to consider including sectors such as aviation and maritime.”
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