Brev til ESA

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Publisert under: Regjeringen Bondevik II

Utgiver: Finansdepartementet

Notification of operating aid in the form of temporary tax reduction - CO2 tax and Basic heating oil tax

Brev | Dato: 14.10.2004

EFTA Surveillance Authority Rue Belliard 35 1040 Brussels , Belgium
Your ref	Our ref	Date
	04/2822 SA AEL/kala	14.10.2004

Subject: Notification of operating aid in the form of temporary tax reduction - CO2 tax and Basic heating oil tax

The Norwegian Ministry of Finance hereby notifies the EFTA Surveillance Authority (the Authority) of a prolongation of a tax scheme for the pulp and paper industry, according to Part I Article 1 (3) and Part II Article 2 of protocol 3 to the Surveillance and Court Agreement.

Reference is made to the Authority’s Dec. No: 148/04/COL in which the Authority assessed both the reduced rate of the CO ₂ tax on mineral oils and the exemption from the basic heating oil tax in favour of the pulp and paper industry. By its decision the Authority authorised this scheme until 31 December 2004, with the possibility for the Government to apply for a subsequent extension.

As recalled the Authority accepted that both taxes could be assessed together, given that they have the same effect on the use of mineral oils, are levied on the same products and are administered by the same authorities.

The general rates of the CO ₂ tax and the basic heating oil tax will amount to NOK 0.52 per litre (approximately 0.06 € per litre) and NOK 0.414 per litre (approximately 0.05 € per litre), in 2005 (according to the Governments budget proposal for 2005). Paying NOK 0.26 per litre of the former and being exempted from the latter leads to a total payment by the industry of approximately 28 per cent of these taxes on mineral oils.

In addition, as of 1 January 2004 minimum levels of excise duties on energy products are stipulated in the Energy Tax Directive. The minimum rate is 21 € per 1 000 litre for gas oil and kerosene used as motor fuels for stationary motors et al. For heating fuels the minimum rate is 21 € per 1 000 litre for gas oil, 0 € for kerosene and 15 € per 1 000 kg (14.3 € per 1 000 litre) for heavy fuel oil. Thus, the notified scheme respects these levels.

As recalled the Authority made a reference to the submitted information that the application of the reduced CO ₂ tax on mineral oils for the pulp and paper industry had led directly to a reduction in CO ₂ emissions of 60 000 tons by 1999. The use of mineral oil in this sector is also very sensitive to changes in electricity and oil prices due to high substitution possibilities in the production. The Authority also made a reference to the emission trading system applicable as from 2005 to CO ₂ emissions.

As stated in our letter dated 2 July 2004 to the Authority, the proposed Norwegian emission trading system is in most aspects similar to the EU system. According to section 3 in the drafted legislation some emissions will, however, be exempted, such as emissions covered by the CO ₂ tax. Even the lowest CO ₂ tax rate is higher than the expected price 1According to the expected price in the report Carbon Market Europe from Point Carbon, delivery prices in 2005 are 8.85 euros and 9.00 euros in 2006 and 2007. In the budget proposal for 2005 the lowest CO2 tax on pulp and paper industry are 88 NOK per tonn CO2, .witch is just above 10 euro per tonne CO2 . on quotas in the period of 2005-2007. All emissions covered by the CO ₂ tax will face stronger incentives to reduce emissions, compared to the emission trading system.

On this background the Norwegian Government notifies a prolongation of this tax scheme until 30 June 2014. This is the date when the Authority’s approval for a reduced electricity tax rate for the same industry expires. By aligning these periods necessary measures targeted at this particular energy-intensive industry can be assessed together.

Yours sincerely,

Tor Lande
Deputy Director General

Heidi Heggenes
Deputy Director General

Enclosure

NOTIFICATION TO THE EFTA SURVEILLANCE AUTHORITY

SECTION I

EFTA State:

Norway

Title of scheme/aid measure:

Operating aid in the form of temporary tax reduction for the Pulp and paper industry.

Level of government responsible for scheme/aid measure:

Central Government

Ministry or other administrative body with statutory responsibility for the scheme/aid measure and its implementation.

Ministry of Finance

P.O. Box 8008 Dep

N-0030 OSLO

Contact:

Heidi Heggenes;

Tel. +47 22 24 42 20

Fax. + 47 22 24 95 11

Legal basis:

Stortingets vedtak om CO ₂-avgift på mineralske produkter (Norwegian Parliament’s annual decision on CO ₂-tax on mineral products) and Stortingets vedtak om grunnavgift på fyringsolje mv. ((Norwegian Parliament’s annual decision on basic heating oil tax).

State whether a new scheme or an alteration to an existing one:

Prolongation of an existing scheme.

If an alteration to an existing scheme give:

- Give date of authorization by the EFTA Surveillance Authority: 30 June 2004 (DecNo: 148/04/COL)

- Specify which rules and condition are being changed and why: Adjusted due to inflation.

Objective(s) of scheme/aid measure:

Environmental

Form(s) of aid:

Tax concession:

- reduced CO2 tax rate

- exemption from the basic heating oil tax

The reduced rate will be set at NOK 0,26 per litre (approximately 0.03 € per litre).

The reduced rate will apply on the use of mineral oil by undertakings identified by reference to SN94 (standard for næringsgruppering)/SIC94 (Standard Industrial Classification):

- Group 21.1 Manufacture of pulp, paper and paperboard

The basis for SN94/SIC94 is EU standard NACE Rev. 1.

State the eligible costs on which the aid is calculated for each form of aid:

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State other aid limitations or criteria for each form of aid:

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Repayment and penalty arrangements:

If a taxable person delivers mineral oil at a reduced rate to undertakings that are not eligible, they will be subjected to supplementary taxation. In addition a default interest of currently 11.75 pct. will be applied.

Supplementary taxation; section 6-6 in forskrift om særavgifter (the Regulation.)

Default interest; section 6-4 in the Regulation. The interest rate is set at three percentage points above the rate set pursuant to Lov 17. desember 1976 nr. 100 om renter ved forsinket betaling m.m. The latter is currently 8.75 percent.

Cumulation of aid:

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Duration of scheme/aid measure:

Given ESA’s approval the duration will be 1 January 2005 till 30 June 2014.

Budget/expenditure:

The aid forecast for the industry will amount to approximately 144 million NOK for 2004. During the 9,5 year period this amounts approximately to 1,370 billion NOK in fixed prices.

For schemes which do not have a specific sectoral or regional aim, specify any resulting sectoral or regional concentration of aid:

Cf. point 9 above.

Estimated number of recipients:

Estimated number of recipients will be approximately 25.

Information control:

The taxable persons are under the general tax scheme obliged to deliver a tax declaration form every three months. This form will show the quantity of mineral oil delivered at a reduced rate. The taxable persons cannot deliver at a reduced rate without documentation that the recipient undertaking is eligible. The Customs authority can at any time carry out an inspection.

Control; section 5-9 in the Regulation.

Fully reasoned justification of the compatibility of the scheme/aid measure backed by necessary statistical information:

As recognized in the Authority's decision 148/04/COL, the measure is in line with the Authority's Guidelines for Environmental Protection point 46.1(b). For further explanation confer the notification.

Other relevant data:

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