European Commission On Tenterhooks

by Ulrika Lomas, Tax-News.com, Brussels

03 May 2002

With the entirety of the European Union and the European Commission on tenterhooks over the outcome of the fuel tax dispute raging in the EU yesterday, Austria made it clear that it was in no hurry to make up its mind before it had to.

The EC has stated that tax breaks for road hauliers introduced by France, Italy, and the Netherlands following the September 2000 fuel tax protests constitute illegal state aid, and wants to ban them.

However, the vast majority of the European Union's 15 members believe that the Commission has over-reached its authority on this issue, and are seeking to take advantage of a provision in the European Union treaty whereby countries can overrule the EC and decide that 'exceptional circumstances' justify the aid - if they vote unanimously.

14 of the 15 EU members had reached agreement early this week, with each country using their support for the move as a bargaining chip to obtain guarantees from other member states on their own subsidies and state aid. According to a recent Financial Times report, Germany - one of the other countries with doubts - agreed to vote to overrule the EC decision after receiving assurances from France, Italy, and the Netherlands that its own subsidies to the coal industry are safe.

According to reports released on Thursday, however, Austria - which wants backing from other countries for an extension of temporary heavy goods traffic restrictions through the country - was in no hurry to relieve the tension prior to the announcement of its decision yesterday afternoon.

The FT quoted the country's representative in Brussels as explaining that: 'Talks are continuing in Austria. We are trying to be as helpful as possible to our colleagues.'

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