• Europe’s tax deals for diesel

    The gap between petrol and diesel taxes in Europe is quite unique in the world and is the main reason why diesel engines have taken off in Europe and not worldwide. This study analyses fuel price and tax trends since 1980 and adds a specific analysis of diesel tax paid by trucks. It finds that in 2014 the gap in tax levels for diesel and petrol paid by motorists was €0.14/l, which is 30% lower than petrol per unit of energy or tonne of CO2.

    It also finds that trucks pay on average €0.44/l diesel tax in the EU now, €0.04 below the rate cars pay and 15% below the inflation-corrected €0.52/l they paid in 2000. Truck diesel tax rebates totalled around €4.5 billion in 2014, up from €0 in 1999. The number of countries giving fuel tax rebates to hauliers has gone up from only one in 2000 to eight now.

    T&E recommends that in the short term Europe revisits the 2007 Energy Tax Directive proposal, and raises the general minimum level for diesel significantly, and correct it for future inflation. In the long term a system similar to the International Fuel Tax Agreement (IFTA) between Canada and the US, which enables states and provinces to tax truck diesel on the basis of where the trucks drive not where they fill up, should be implemented.