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Bureau of National Affairs

Monday January 22, 2001 Page G-2  

European Commission to Sue Three Members
Over Reduced Fuel Taxes for Truck Drivers

     BRUSSELS--The European Commission said Jan. 19 it will initiate legal action against Italy, France, and the Netherlands after European Union finance ministers failed in their attempt to reach an agreement on phasing out preferential excise taxes on fuel for truck drivers. 

     The reductions in fuel taxes for truck drivers by EU member states were granted after the road haulers blocked roads and ports when gas and diesel prices took a big jump in September. The excise fuel tax exemptions is one of 96 different preferential schemes that the Commission expected the Council of Economic and Finance Ministers to agree to phase out.

     "Thirty-six of the 96 preferential schemes that we expected an agreement on ... are illegal as of Jan. 1," said Taxation Commission Frits Bolkestein. "We have held back from taking any legal action even though it is our responsibility to do so. The Commission showed flexibility in allowing a legal limbo to start on Dec. 31 but the Commission cannot allow a legal limbo to continue until the cows come home. Therefore we must begin legal action." 

     The exemptions for fuel taxes are the most controversial, especially since they carry environmental implications. The Commission has been arguing for several years that, if the European Union is to meet its Kyoto Protocol commitments to reduce greenhouse gas reductions, it must eliminate all exemptions to the mineral oil tax. This is especially true of those in the transport sector because it is the largest source of growing greenhouse emissions in the European Union, Bolkestein said. 

     The major sticking point in the negotiations among finance ministers was a demand by Germany that an agreement be reached on specific figures limiting the reduced excise duties to a maximum number of liters of fuel per truck, the Commission said. Other countries insisted on a two-year transition period to phase out the exemptions but countries led by France and Ireland were opposed. 

     Sweden, which took over the rotating EU presidency Jan. 1, said it will continue negotiations on the issue in the next several weeks and hoped to gain an accord on the issue in February. 

 

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