Ministers rule out more EU oil tax cuts

Finance ministers say high crude prices will not force concessions to anti-fuel tax campaigners

EU finance ministers this weekend pledged not to reduce fuel taxes in response to high oil prices or - implicitly - disruptive campaigns for fuel tax cuts. At an informal session of the "Ecofin" Council at Versailles, France, all 15 ministers said individually that there would be no change in policy "for economic and environmental reasons".

Ministers called on oil producing states to increase production so as to reduce prices. They also suggested further efforts by the Paris-based International Energy Agency to encourage energy saving measures and called for speedy implementation of an EU energy efficiency action plan released this spring (ENDS Daily 27 April) so as to reduce oil dependency.

The statement is a first coordinated EU response to an angry campaign for tax cuts that paralysed France and has now spread to other countries. Protesters blocked roads in the EU's unofficial capital, Brussels, over the weekend. Petrol shortages have appeared in several parts of the UK following several days of oil refinery blockades. Similar direct action protests have been reported in Germany and Italy, and have been threatened in Ireland.

The French government was put in an embarrassing position by the joint finance ministers' statement, since protesters last week forced it to offer wide-ranging concessions to fuel tax protesters (ENDS Daily 6 September). According to a report in today's Wall Street Journal Europe newspaper, Dutch finance minister Gerrit Zalm said during the Versailles meeting that the joint declaration "means that France cannot continue to cut taxes". "Not every is happy about [its] decision," he went on. "If you talk all the time about coordination in Europe you should inform the others about such matters."

Other countries have so far held out against the campaigns, though both the Italian and Belgian finance ministers are reported to have left open the possibility of some concessions.

The organisation of oil exporting countries, Opec, yesterday agreed to increase crude oil output by 800,000 barrels per day. It is the third time this year that the group has boosted production. It remains unclear whether even this will have a significant impact on prices.

Follow Up:
EU Council of Ministers, tel: +32 2 285 6111, and Ecofin statement on oil prices. See also the European Commission's energy efficiency action plan.

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