EU states fall out over fuel tax concessions

Germany slams France for "wild tax cuts", Commission to scrutinise concessions by four countries

Europe's fuel tax crisis has created splits between EU member states with Germany's transport minister Reinhard Klimmt yesterday heavily criticising his French counterpart Jean-Claude Gayssot for climbing down over fuel taxes just days after EU finance ministers had agreed not to give way.

Mr Klimmt made his voice heard at an extraordinary meeting of EU transport ministers called in Luxembourg yesterday to debate the impact of oil prices on transport policy. He said that the "wild cuts" made by some member states would only "distort competition...more".

He singled out France for his strongest reproach, attacking Mr Gayssot for "going it alone" and warning the French government against starting a "a downward spiral of taxes". He said France could not "simply ignore" the finance ministers' agreement to hold firm on fuel tax. EU transport commissioner Loyola de Palacio said that fiscal compromises would give the wrong signal to oil producing states.

In a related development, The European Commission announced yesterday that tax concessions made by France, Belgium, the Netherlands and Italy (ENDS Daily 18 September) are to be investigated to ensure that they comply with EU state aid rules. The member states have a month to provide details of their subsidies.

Follow Up:
EU Council of Ministers, tel: +32 2 285 6111 and meeting minutes; European Commission, tel: +32 2 299 1111; German transport ministry, tel: +49 30 20080, and press release.

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