The European Parliament’s Subcommittee on Tax Matters (FISC) organised a public hearing on “The role of tax in aligning the green transition and competitiveness” On 24 April 2025.

At the hearing, experts were questioned on the role that tax policy can play in facilitating the economic green transition while ensuring that EU businesses remain competitive.

The hearing, organised by the European Union Parliament’s tax matters subcommittee, brought together experts from the OECD, the Austrian Institute for Economic Research and business representatives who gave their views on how fiscal measures can support the green transition and enhance sustainability in key sectors.

The discussion with MEPs was primarily oriented around what type of tax incentives should be explored and how to avoid pitholes linked to such incentives, which pieces of legislation in the pipeline should be prioritised, the tax reform success stories which can serve as models, carbon pricing, and ways to remove harmful subsidies introduced years ago to address previous priorities.

In the discussion panel, Kurt Van Dender of the OECD discussed how tax policy can support climate goals by influencing consumer behaviour through pricing and offering tax incentives. He highlighted the importance of tax systems that help reduce emissions.

Mitra Qurban of DHL shared the business perspective on the hearing’s theme and highlighted sustainability measures adopted by their group. She suggested tax measures for the EU, including green VAT rates, tax breaks for zero-emission vehicles, and lower taxes on green electricity.

Lúcio Vinhas de Souza of BusinessEurope called for a tax system that “reinforces the internal market, supports innovation, and enables businesses to scale sustainability.”

And lastly, Dr. Angela Köppl highlighted three key issues for the EU regarding carbon and environmental taxes: reforming the Energy Taxation Directive to equalise fossil fuel pricing, adjusting the Carbon Border Adjustment Mechanism to keep EU low-carbon products competitive, and implementing a global carbon levy on international shipping.