House of Lords - European Union - Twenty-Fourth Report

Select Committee on European Union Twenty-Fourth Report

PART 4 SUMMARY OF KEY CONCLUSIONS

Competition

87. The Committee accepts the implications of the findings established by the ECMT and endorsed by the Commission and the Transport Ministers that, at present, because of countervailing differences in other taxes and costs, the existing differences in rates of fuel taxation do not serve to distort competition in the haulage market. (paragraph 40)

88. The Committee accepts the need for minimum rates of fuel duty in the EU. We consider that the increase in minimum rates embodied in the Energy Tax Directive should serve to avoid the generation of distortions to competition. (paragraph 41)

Government revenues

89. The Committee accepts the Government's findings that the Commission's proposal would lead to a significant net revenue loss to the UK and notes that the Commission has not presented any evidence to the contrary. (paragraph 48)

90. The Committee accepts the need for minimum rates of fuel duty to protect government revenues across the EU. Moreover, we consider that the increase in minimum rates embodied in the Energy Tax Directive should serve to enhance revenues for the sum of Member States. (paragraph 49)

The environmental impact of the proposal

91. The Commission's proposal to harmonise diesel fuel taxation does not contribute to the required internalisation of the external costs of transport—for the EU as a whole, it moves taxation in the opposite direction. The proposal would therefore have a negative overall impact on the environment. (paragraph 73)

92. The Commission's proposal would lead to a significant reduction in the volume and share of freight carried by rail in the UK. (paragraph 74)

The Commission's forward work programme

93. In view of the agreement on the Energy Tax Directive, the Committee recommends that the Commission withdraw the present proposal. The Commission should bring forward its proposed Framework Directive on Infrastructure Charging before any further discussion of the reform of fuel taxation. (paragraph 80)

94. The Committee considers that the Commission should coordinate the development of its legislative proposals so as to ensure coherence between its taxation, transport and environmental policy objectives. (paragraph 81)

The position of the UK Government

95. The Committee welcomes the Government's submission of specific arguments on the Commission's proposal on fuel duty and recommends that the Government frame its response to future proposals on transport tax reform on the basis of the specific merits and de-merits of each proposal. (paragraph 86)

Recommendation

96 The Committee considers that the taxation of fuel in the European Union raises important questions to which the attention of the House should be drawn and makes this Report to the House for information.

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