New EU Carbon Tax Will Increase Pump Prices

Thursday, 3. December 2009

A recent report in Fleet News has revealed that the EU is planning a new carbon tax on all motor fuel. This would add a further tax to VAT and fuel duty already charged. Thomas Carroll, the EU’s taxation directorate general, told a recent meeting of European accountants that the new commission could review the EU’s 2003 energy taxation directive as early as the New Year. The draft proposals insist that excise duties should contain a tax based on the CO2 emissions of specific fuels, with its level set by complex formulae. The proposal is timed to coincide with the Copenhagen climate change summit at which the EU is likely to make tough new long-term commitments to reduce CO2 emissions making it less likely that the proposals will be challenged politically. However, it is still likely to be resisted, as tax decisions must be agreed by every member state. If not we could soon be facing significant duty increases. Just more pain for 2010. By Graham Hill