The European Powder Metallurgy Association (EPMA) is lobbying the European Commission over an Energy Tax Directive (ETD) that, it states, will negatively impact the competitiveness of Europe’s PM industry.
A Position Paper by Ingo Cremer, EPMA President, and Jonathan Wroe, EPMA Executive Director, has been circulated to the European President and The European Commission in order to raise awareness of the negative impact of the ETD.
The full Position Paper reads as follows:
Proposal for a Council Directive amending Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity
1 October 2012
The European Powder Metallurgy Association (EPMA) represents the European Powder Metallurgy Industry within Europe and Internationally. The European Powder Metallurgy Industry counts approximately 50,000 employees for an overall production of €8.5 Billion. Powder Metallurgy is a recognized green technology using less material and energy than other metal‐forming manufacturing processes. The Powder Metallurgy Industry delivers mainly to the European automotive industry in the form of numerous components (between 150 and 250 parts per car) and is therefore subjected to a high pressure on costs. The PM components of a car are, in the main, sourced within the continent where the car is produced, but there is already a significant flow of parts between continents i.e., parts made in Asia or America which are sold to Europe, as well as European PM parts sold to Asia, as these are products that can be easily shipped on long distances. This means that these products are especially sensitive to worldwide competition.
EPMA members would like to react to the publication by the European Commission of a proposal intended to review the rules on the taxation of energy products and electricity in the European Union. The ETD Proposal splits the minimum tax rate into two components: the energy part and the CO2 part. Although “Metallurgical processes” are exempted from the energy part of the revised ETD, the CO2 part would be applied to them. The Commission’s proposal therefore gives EPMA the opportunity to reiterate that all our Members support the principle of fair and harmonised rules of taxation within Europe and Internationally. In this respect, we would like to raise the following comments:
- The EPMA does not believe that this proposal would shift “taxation away from labour” but would rather add another tax, which would impact financially on the Powder Metallurgy Sector, especially the Small and Medium Enterprises SMEs (about 40% of the EPMA membership).
- The CO2 Tax would also weaken the EU Powder Metallurgy Industry against their Non‐EU competitors, which would not have to pay CO2 tax on their imported product.
- The CO2 Tax of the ETD proposal would thus increase taxation on the Powder Metallurgy Companies and lead therefore to higher unemployment contrary to what is expected.
- Since most of the Powder Metallurgy companies are too small CO2 emitters to be covered by the Emission Trading Scheme (ETS), the EPMA is also concerned about the current non alignment of the CO2 tax part with the average market price of emission allowances (Currently ca. 7€/tonne CO2 in ETS to be compared with the 20€/tonne CO2 in the ETD proposal). We would like to point out the position of the European Parliament which recommends that “sectors outside the [ETS] scheme are not penalised by comparison with those that are.”
For all these reasons the EPMA believes that the adoption by the European Council of the proposal presented by the European Commission would weaken European industry competitiveness, would endanger workplaces and would in the end penalize consumers. The EPMA hopes that the relevant institutional interlocutors will give due consideration to these points during the legislative procedure. We remain at the disposal of the Commission and all other institutions, should there be a need to clarify or explain the contents of this position paper in greater detail.