Wednesday

28th Sep 2016

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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

Investigation

Diesel cars still dirty, despite huge EU loans

The European Investment Bank lent billions to carmakers, in part to clean up diesel cars. But diesel cars are still dirty, prompting questions if the money was well spent.

Stakeholders' Highlights

  1. EJCMourns the Passing of Israeli Statesman Shimon Peres
  2. World VisionNew Tool Measuring Government Efforts to Protect Children Released
  3. GoogleDid You Know Europe's Largest Dinosaur Gallery Is in Brussels? Check It Out Now
  4. IPHRHuman Rights in Uzbekistan After Karimov - Joint Statement
  5. CISPECloud Infrastructure Providers Unveil Data Protection Code of Conduct
  6. EFAMessages of Hope From the Basque Country and Galicia
  7. Access NowDigital Rights Heroes and Villains. See Who Protects Your Rights, Who Wants to Take Them Away
  8. Martens CentreQuo Vadis Georgia? What to Expect From the Parliamentary Elections. Debate on 29 September
  9. EJCAppalled by Recommendation to Remove Hamas From EU Terrorism Watch List
  10. GoogleBringing Education to Refugees in Lebanon With the Clooney Foundation for Justice
  11. HuaweiAn Industry-leading ICT Solution Provider and Building a Better World
  12. Belgrade Security ForumCan Democracy Survive Global Disorder?