Brussels, 24/07/2002 (Agence Europe) - On Wednesday the European Commission adopted the draft directive imposing a single excise duty of EUR 350 per thousand litres for commercial diesel by 2010, bringing the diesel and lead-free petrol thresholds closer together for private vehicles (see yesterday's Europe, p.9, for details).
Outlining the proposal to journalists, Commissioner Frits Bolkestein said it was necessary because there is a huge difference between the rate of duty applied by the Member States and this gives rise to an uneven playing field in the road transport market (liberalised in 1998). Setting a threshold rather than a single duty rate would have been insufficient to even out the playing field, he argued, adding that bringing the excise duties closer together was a step in the direction of providing better protection of the environment by encouraging more efficient fuel use.
Bolkestein recognised that the draft directive would be greeted by scepticism by the United Kingdom in the Council, where the decision on the new directive will have to be taken by unanimous voting. Heading off the UK's reaction (expecting it to raise the issue of subsidiarity in its objections), he pointed out that Treaty Article 93 foresaw that the Commission should unveil proposals to harmonise excise duty insofar as such harmonisation is needed to ensure the establishment and functioning of the internal market, which applied in this case in Bolkestein's view. He also dismissed the argument that the UK ran the risk of losing significant tax revenue since it would have to cut diesel duty from the current rate of EUR 742 to EUR 350, saying such reasoning was superficial, adding that the UK Treasury would not necessarily lose any revenue since lorries would be less inclined to fill up in continental Europe rather than the UK and anyway, it would still be possible to increase duty on non-commercial diesel. The Commissioner hoped that the new directive would pave the way for progress in the Council discussions (in deadlock since 1997) over energy taxation.