New step towards harmonisation of taxation on commercial diesel fuel in the European Union

In order to achieve better environmental protection and to eliminate huge problems of distortion of competition in the EU’s liberalised road transport markets, the European Commission presented last July a proposal to harmonise gradually Member States’ excise duty on commercial diesel fuel and to align minimum excise rates on non-commercial diesel and unleaded petrol.

Commercial diesel is defined as diesel used by vehicles over 16 tonnes and by buses and coaches which can carry more than 9 people. The proposal would establish a target rate of € 350 per 1,000 litres from 1 January 2003, allowing Member States a gradually narrowing scope so as to arrive at a single harmonised rate by 2010.

As for non-commercial diesel (used by private individuals), the proposal would apply the same minimum level of excise duty as unleaded petrol by 2006 since there are no environmental or other reasons to justify the present lower minimum rate on diesel.

Moreover, the proposal would increase the present minimum rate of duty on unleaded petrol from 287 to 360 to take account of inflation.

Excise duties on diesel vary greatly today in the European Union, from less than € 300 per 1,000 litres (Austria, Belgium, Greece, Luxembourg, Portugal, Spain) to more than 700 (UK).