Sweden swims against the tide over fuel tax

Haulage industry left fuming as government includes diesel duty hike in budget proposal

The Swedish government yesterday underlined the seriousness of its long-term green tax intentions, brushing aside fuel tax protests to propose a further rise in diesel duty in its 2001 budget. The SKr0.1 (euros 0.01) increase will push up diesel prices - already the second highest in the EU after those in Britain - by 3%. Diesel duties were also increased in last year's budget (ENDS Daily 20 September 1999).

Swedish hauliers, who have been blockading major ports for several days, were angered by the move. Even so, the government appears to have placated protesters by promising inquiries into taxation of the haulage and farming industries. Blockades were reported to be disappearing this morning.

Billed as year one in a ten year ecological tax reform, next year's budget includes a total increase in environmental taxation of SKr3.3bn, about 10% of the final green tax target of SKr30bn. The government is committed to cutting employment taxes as environmental ones go up. Income taxes are set to fall next year by SKr12.5bn.

In addition to higher diesel duty, the budget proposal includes a 15% increase in an Sweden's carbon dioxide emissions tax and a SKr0.018 per kilowatt hour increase in electricity tax. Sales tax (VAT) on public transport is to be halved from 12% to 6%, while spending on environmental research and rehabilitation is to increase by SKr360bn.

Follow Up:
Swedish environment ministry, tel: +46 8 405 1000, and budget press release.

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