Record oil prices must not be matched by record fuel taxes!

Brussels - The IRU warns that a European Commission’s proposal to raise the EU minimum level of fuel duty from the current rate of EUR 302 per 1000 litres to EUR 380 by 2014, would, if adopted, pose even greater penalty on the EU economy than it would to the road transport industry.

With the European Parliament’s Economic and Monetary Affairs Committee due to vote on this proposal on Tuesday 18 December, Damian Viccars, IRU Head of EU Fiscal Affairs, said, ‘‘World fuel prices are rising at a faster rate than at any time in a decade. A vote now by the European Parliament calling on national governments to raise minimum levels of fuel duty would be disastrous for European businesses and citizens. If agreed upon by EU Member States, this proposal would be a heavy blow for the EU economy’s competitiveness on the global market. Any penalty on road transport is an even bigger penalty on the economy!”

The proposal’s stated aims are: to reduce competitive distortions due to variations in EU fuel taxation and to benefit the environment by eliminating so called ‘tank tourism’, whereby road transport operators allegedly make extensive detours to buy cheaper fuel in certain EU countries. Neither will be achieved.
Indeed, the current proposal will not allow any convergence of EU fuel duty since, while minimum taxes would be raised, no maximum rate is considered. Currently high taxing governments will simply have a good incentive and possibility to further increase fuel duties, as lower taxing countries reach higher tax levels. New competitive distortions will be created, only this time at a higher and more costly level to industry, society and the economy as a whole.

Additionally, the phenomenon of so called ‘tank tourism’ is greatly exaggerated. No comprehensive European studies exist with an accurate estimation of its volumes. In fact, ever more demanding delivery or passenger schedules, labour costs, and working and driving time limits make any significant route detour prohibitively expensive or impossible. Environmental benefits will, therefore, be non-existent.
 
The IRU advocates a single rate of commercial diesel duty, applicable throughout the EU and available to all commercial vehicles including trucks, buses coaches and taxis. This harmonised rate should be set at a level – below EUR 350 per 1000 litres – that reflects the importance of the sector in delivering economic coherence to the EU’s single market, as well as social gains through sustainable mobility to EU citizens.
‘‘The Commission proposal has all the disadvantages of raising costs for transport operators, businesses and consumers, but none of the advantages that would come from eliminating distortions of competition. Nor will it have any effect on the environment. It makes no sense for the European Parliament to support such a flawed proposal. The IRU calls upon members of the Economic and Monetary Affairs Committee to reject this proposal and ask the European Commission to think again,’’ Damian Viccars concluded.