Thursday, April 12, 2007

Plans to eliminate “fuel tourism” – the practice by which hauliers drive considerable distances to buy cheaper fuel – have been announced by the Commission.

A proposal drafted by the EU tax commissioner Laszlo Kovacs envisages harmonising the minimum level of duty on diesel at €0.359 per litre in 2012, and €0.38 by 2014. Kovacs believes this will reduce the large range in diesel taxes sufficiently to wipe out the incentives for fuel tourism.



T&E welcomed the plans for their benefits to fighting climate change, describing them as “a step in the right direction”. T&E policy officer Nina Renshaw said: “Fuel tax increases lead to improved operational efficiencies, and therefore lower CO2 emission – it’s that simple. CO2 emissions from road transport shot up by 20% in Europe between 1995 and 2003, but in Germany where the fuel price rose by 36% emissions fell by 3%.”



If the plan is approved, seven of the 15 states who formed the EU until 2004 would have to increase diesel taxes by 2012 (A/B/E/GR/L/P/SF). But the proposal will only become law if all 27 member states approve it, as taxation legislation at EU level requires unanimity.



T&E says diesel should ultimately be taxed at a higher rate than petrol to reflect higher CO2 emissions per litre of fuel. “A litre of diesel burned releases 12% more CO2 than a litre of petrol,” Renshaw added, “so the minimum tax for diesel should be 12% more than for petrol.”



This news story is taken from the April 2007 edition of T&E Bulletin.

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