Tuesday

24th Oct 2017

EU plans for diesel tax hike spark fierce opposition

The European Commission is locked in an internal struggle over whether to raise the minimum duty on diesel fuel from 2012, with several EU capitals preparing for a similar battle, if the proposal is eventually adopted by the college of commissioners next week.

EU tax commissioner László Kovács is set to table a proposal to harmonize the minimum level of excise duties at €359 per 1000 litres of diesel in 2012 and subsequently at €380 in 2014, a move which would see most EU states increasing their current rates.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

According to Mr Kovács' paper – seen by EUobserver – such a rise would stamp out so-called fuel tourism, as big trucks now make detours from their routes to tank in a state where it is the cheapest, generating more greenhouse gas emissions as well as losses to some EU states' coffers.

Germans, for example, are willing to drive two to four additional kilometres for each euro cent price differential compared to a neighbouring country in the case of gas oil. Fuel tourism cost Germany €1.9 billion in 2004.

The document was scheduled for adoption in the commission by so-called written procedure last week, but due to internal opposition this quiet method was abandoned.

The issue will now be discussed by all 27 commissioners next Wednesday (28 February).

The main opposition comes from EU budget commissioner Dalia Grybauskaite, a former finance minister in Lithuania, with one official telling EUobserver that four other commissioners Charlie McCreevy (internal market), Danuta Huebner (regional policy), Siim Kallas (administrative affairs) and Viviane Reding (information society) - have by now adopted a critical stance toward Mr Kovács' proposal.

According to Mrs Grybauskaite Europe "needs to decrease minimum rates for fuel" in order to keep its economy on the up.

"Increasing excise duties would play the role of catalyst for fuel prices", she said, underlining "it is surely not our goal of today, keeping in mind a recent tendency of fuel prices".

Such comments seem to reflect the current mood in Vilnius, with one Lithuanian diplomat saying the Brussels proposal should be scrapped as it would translate into an overall increase in prices and inflation.

"It could freeze Lithuania's euro hopes", a diplomat told EUobserver, adding "taxes remain one's competitive edge and countries with high rates have taken a voluntary risk".

Excise duty represents between 30 to 60 percent of the pump price of gas oil fuel - excluding VAT – making it responsible for six to eighteen percent of the running costs of a road haulage business.

But even EU states with the highest diesel duties at the moment, such as the UK, are awaiting the outcome of the Brussels debate with interest, as the original proposal from 2002 suggested an EU-wide single rate of duties on diesel fuel, leading to full harmonization.

The current paper - to be discussed by the heads of commissioners' cabinets on Monday (26 February) – fixes only a minimum rate.

"We can live with an increase likely to be proposed now", one UK diplomat told EUobserver, as the UK excise duties exceed the levels set by EU executive body. However, London "opposes harmonization as it would harm revenues to national coffers." The diplomat also pointed to the principle of subsidiarity, according to which action should where possible be taken by the lowest competent authority.

Diesel tax hike plan highlights internal commission rift

The European Commission has tabled a controversial bill to raise the minimum duty on diesel from 2012, aimed at stamping out fuel tourism and decreasing air pollution. But even after weeks of internal struggle, Brussels failed to speak with one voice, with the Lithuanian commissioner officially opposing the plan.

Macron puts trade policy on summit table

France's president wants a "political discussion" on EU trade policies at Thursday's summit, amid domestic concerns over Canada and South America deals. But his colleagues are likely to avoid a lengthy debate.

Analysis

Juncker's euro-push could risk unity, warns eastern flank

The EU Commission chief hopes that as Emmanuel Macron pushes for euro area countries to integrate further creating a multi-speed Europe, central European members will be more inclined to join the single currency. Are they?

News in Brief

  1. Tusk: It's up to London to have a good Brexit deal
  2. Bettel wants more ministerial meetings on digital
  3. Austria's Kurz to open coalition talks with far-right
  4. Estonia: Finalising digital market before 2019 'do-able'
  5. Don't let City of London 'drift away', Luxembourg warns
  6. Far-right enters German parliament officially
  7. Orban declares migrant-free zone in Eastern Europe
  8. Madrid set to use force to stop Catalonia independence

Stakeholders' Highlights

  1. A Soul for EuropeWho Assumes Responsibility for Europe?' Conference on 10-11 November in Berlin.
  2. Martens CentreI Say Europe, You Say...? Interview With EU Commission VP Jyrki Katainen
  3. Mission of China to the EUPresident Xi Jinping Proposes Stronger Global Security Governance at Interpol Assembly
  4. European Friends of ArmeniaEU Engagement Could Contribute to Lasting Peace in Nagorno-Karabakh
  5. UNICEFViolence in Myanmar Driving 12,000 Rohingya Refugee Children Into Bangladesh Every Week
  6. European Jewish CongressBulgaria Applauded for Adopting the Working Definition of Antisemitism
  7. EU2017EENorth Korea Leaves Europe No Choice, Says Estonian Foreign Minister Sven Mikser
  8. Mission of China to the EUZhang Ming Appointed New Ambassador of the Mission of China to the EU
  9. International Partnership for Human RightsEU Should Seek Concrete Commitments From Azerbaijan at Human Rights Dialogue
  10. European Jewish CongressEJC Calls for New Austrian Government to Exclude Extremist Freedom Party
  11. CES - Silicones EuropeIn Healthcare, Silicones Are the Frontrunner. And That's a Good Thing!
  12. EU2017EEEuropean Space Week 2017 in Tallinn from November 3-9. Register Now!