30th Jul 2021

Commission cool on Sarkozy fuel tax cap proposal

  • French fishers keep blocking ports and fuel depots in protest against high diesel costs (Photo: EUobserver)

The EU has given a cool reception to an idea raised on Tuesday (27 May) by French President Nicolas Sarkozy for an EU-wide capping of the value added tax (VAT) on fuel as a way to tackle surging oil prices.

"If [the price of] oil continues to rise, should we not suspend the VAT tax part of oil prices?" Mr Sarkozy told French radio RTL.

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"I cannot decide this on my own, as it is a decision which should be a European one, but I can imagine that France is not the only country confronted with rising oil prices," he said, adding that he would submit the idea to his "European partners."

The bloc's executive arm gave a lukewarm reaction the idea.

The European Commission stressed it was "not very sure what exactly" Mr Sarkozy was proposing. Nonetheless, a spokesperson said, changing the way VAT on fuel is calculated would require a proposal by the commission, followed by an unanimous approval by the EU's 27 member states.

"The question of taxes comes up very often, but still we have doubts if it is the best way to react in these cases," Maria Assimakopoulou, the European Commission's spokesperson for taxation issues said on Tuesday.

In addition, modifying fuel taxation to fight rising oil prices would give "a very bad signal" to oil-producing countries that they can keep boosting oil prices, added Ferran Tarradellas Espuny, the spokesman for energy.

"That's in principle a very bad message that we do not want to send," he said.

Mr Sarkozy's proposal came as French fishers keep blocking ports and fuel depots across the country to show their protest against high diesel costs for fishing boats, which rose from 0.45 to 0.70 euros for a litre in the last six months.

"[But if] he made this comment in relation to the fishermen, I have to tell you that fishermen are taxable people, so they deduct VAT for all taxable income that they have," Ms Assimakopoulou said.

Meanwhile, Portuguese and Belgian fishers are also planning protests in the near future, according to reports from the BBC.

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