Hungary proposes EU start dialogue with energy producers - extended

EU

Hungary proposed to EU heads of state in Brussels on Thursday that Europe’s biggest energy consumers start talks with producers in the developing world with the aim of achieving prices sustainable in the long term, Prime Minister Ferenc Gyurcsány said. Gyurcsány says no tax issue is taboo at EU summit discussions.

The proposal was accepted by the European Socialist parties and by the government leaders at a meeting before the summit, Gyurcsány said. Gyurcsány told a press conference that parts of Hungary budget must be re-examined in order to raise energy price subsidies for low-income households. First support must go for district heating, which can be as expensive as half of a pensioner’s entire monthly check. He added that Hungary would consider introducing a “Robin Hood” tax on energy companies enjoying windfall profits because of higher crude prices when the tax system is renewed.

Hungary also joined new member states in urging the EU to revisit its agricultural subsidy system and adopt equal terms for new and old members. “We ask the EU’s central bodies to reconsider whether it is acceptable to uphold an agreement by which new member states receive less farm subsidy than the old ones,” said Gyurcsány. He noted that this year, the countries of Eastern Europe will receive only half of the amount of subsidies allocated to farmers in old member states.

 

 
NO TAX ISSUE IS TABOO

No tax proposals has been considered to be taboo at the European Union summit regarding the dramatic increase of energy prices, with the VAT, excise tax and the so-called Robin Hood tax to potentially be levied on the windfall profits of energy companies all up for discussion, Hungary’s Prime Minister Ferenc Gyurcsány told reporters in Brussels on Friday. Hungary’s stand is close to that of EU member states which believe that the increase in energy and food prices has placed the subsistence of some groups of households and economic sectors at risk, Gyurcsány said. Therefore the usual measures are not sufficient to resolve the present problems, the PM said.

Gyurcsány was speaking after European Commission President Jose Manuel Durao Barroso announced in Brussels early in the morning that the EU will not prevent its 27 member states from imposing a so-called Robin Hood tax on the increased profits of energy companies or from reducing the excise tax on certain products in order to moderate the effects of the rising cost of oil. Barroso said that the EU must help those member-state citizens who have the most difficulty bearing the economic burden of increased energy and food prices.

Barroso did not mention VAT among taxes that could be amended to ease the effect of the rising cost of oil. President Nicolas Sarkozy of France, which will hold the Presidency of the Council of the European Union during the second half of 2008, announced on Thursday evening that the EU is examining all member-state economic-relief proposals, including a decrease in VAT, which both the EU Commission and member states have previously rejected.

A draft resolution to be passed at the end of the EU summit meeting, leaked to Reuters, will invite the Commission to examine the feasibility of taxation measures smooth the impact of sharp oil-price increases and report on the results. The draft does not list, however, the measures to be considered, according to Reuters.

Gyurcsány said on Thursday that Hungary would consider introducing a “Robin Hood” tax during the next few months “when we examine a renewal of the tax system.” Gyurcsány announced during a press conference on Thursday that parts of Hungary’s budget must be re-examined in order to raise energy-price subsidies for low-income households. Gyurcsány said that this measure could have a budget effect of Ft 20 billion. The prime minister noted that with rising prices of district heating, its cost could reach half of a pensioner’s entire monthly benefits. (MTI-Econews)

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