UK Chancellor Likely To Resist EU Fuel Tax Plan

by Robert Lee, Tax-News.com, London

14 September 2001

The UK Treasury has indicated that it is opposed to an European Commission proposal to harmonise the level of tax on fuel in European Union member states. For Britain this would result in a price reduction of unleaded fuel by 7 pence per litre to 71 pence which would cost the Treasury around £4 billion each year.

An EU Paper entitled: 'European Transport Policy For 2010: Time To Decide,' states that 'with the road transport sector now fully opened up to competition, the absence of harmonised fuel taxes seems increasingly to be an obstacle to the smooth functioning of the internal market.'

UK chancellor Gordon Brown refused to give in to hauliers who blockaded the country's fuel stations last Autumn in protest at the high tax which pushed up the cost of fuel compared to most countries across Europe and the rest of the world.

It is therefore unsurprising that Mr Brown is wholly unhappy at this latest plan from the EC. A spokesperson from HM Treasury said: 'We do not believe in tax harmonisation. The setting of taxation rates is a matter for individual member states, not the European Commission. The chancellor has already delivered a substantial and targeted package of measures to reduce costs to motorists.'

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