EU Tax Chief Wants Accelerated Talks On Carbon Border Tax

By Todd Buell
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Law360 (May 26, 2020, 2:16 PM EDT) -- The European Union's top tax official said Tuesday that the bloc needs to accelerate discussions of its plan to make it more expensive for companies to move production to jurisdictions with looser environmental laws. 

Speaking at a virtual event organized by the Institute for International Finance, Paolo Gentiloni, the EU's tax commissioner, rejected the idea that environmental concerns should be moved to the side in favor of helping the economy rebuild after the novel coronavirus pandemic subsides.

Trying to separate the two goals would be a "dangerous mistake" he said. "It's now or never."

Gentiloni's comments come one day ahead of a key announcement from the European Commission about how it hopes to implement the plans put forward last week by the heads of France and Germany to help Europe bounce back from the health and economic crises caused by the pandemic.

Progress on the so-called carbon border adjustment mechanism, which would make it more expensive for European companies to import items from countries with weaker environmental laws, is urgent, Gentiloni said.

"It's time to accelerate and not to slow down," he said about the tax.

The commission didn't respond on the record to his remarks.  

In early March, Gentiloni said the adjustment mechanism would help prevent companies from moving production to areas with weaker environmental standards. The commission's proposal on a border mechanism isn't due until next year. The tax commissioner said earlier this year that the plan would have to be in line with the EU's international commitments.

The commission declined to comment on whether a border adjustment mechanism would be part of the recovery plan that it was due to announce on Wednesday. The commission is hoping to build off a proposal put forward last week by Germany and France to set up a €500 billion fund ($549 billion) to help Europe recover from the coronavirus crisis.

The two countries said that the pandemic shouldn't stand in the way of addressing climate change, including the EU's 2030 emissions targets and the possibility of a carbon tax. 

--Additional reporting by Alex M. Parker. Editing by Neil Cohen.

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