In mid-June, your front-page story declared “Commission to relaunch talks on EU carbon tax” (17-23 June). Last week, the European Commission postponed plans to revise the energy taxation directive. That is a huge missed opportunity.
Currently, member states have an incentive to keep fuel taxes low, in particular those on diesel that can be carried over large distances in lorries. Luxembourg is a good example. In 2007, its low fuel tax led to five to ten times higher fuel sales per head than in neighbouring Germany, France and Belgium. Most worryingly, such profiteering by fuel-tax havens prevents neighbouring countries from making independent decisions on fuel taxes and moving towards a greener taxation system. From a climate policy perspective, fuel-tax competition is obviously counterproductive. In the end, it is also damaging to European economic prosperity.
People tend to think raising fuel taxes is political suicide, and France’s recent difficulties launching a carbon tax have added to that impression. But the reality is more nuanced. Over the past six months, nine EU governments have raised fuel taxes by more than 3 cents per litre. That’s smart thinking, and surely preferable to raising income and labour taxes, which would have cost jobs.
Transport & Environment
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