European Commission set to unveil standardised taxes on fuel

Sep 12, 2001 02:00 AM

The European Commission is set to unveil a proposal to standardised taxes on fuel across Europe. The policy, designed to create a fair market for businesses, could ignite a row in Britain over the high cost of motoring and put the commission on a collision course with British finance minister Gordon Brown.
Britain has the highest rate of tax on petrol in the 15-nation European Union. The commission was quoted as saying: "With the road transport sector now fully opened up to competition, the absence of harmonised fuel taxes is increasingly an obstacle to the smooth functioning of the internal market.
"Excise duties differ enormously from one country to another, ranging from 20 pence per litre on unleaded petrol in Greece to 50 pence (0.8 euros, $ 0.73) per litre in the United Kingdom. "In the medium term, petrol and diesel should be taxed similarly for all consumers."

Commission officials believe that the standard level of duty should be linked to the current average level across the 15 member states, currently about 40 pence a litre. The broadsheet quoted Gilles Gantelet, a spokesman for the commission's directorate-general on transport, as saying: "Firms in Britain are taxed twice as much for transport fuel as their rivals in Greece, so how can they compete?" "We have to harmonise excise duties to create a proper competitive environment for road transport."
Initially, states would be able to fix fuel duty within a band around the average rate, allowing governments to take account of other transport taxes such as road tolls or annual vehicle taxes, which affect the overall cost of motoring. The commission's proposal could reduce the average price of a litre of unleaded petrol in Britain from 78 pence to 71 pence, but would cost the Treasury billions in lost revenue.

The proposal would revive the controversy over prices that threw Britain into chaos last year when thousands of petrol stations were closed as hauliers and farmers blockaded refineries in protest at high fuel costs.

Source: The Sunday Times
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