In August last year, the European Commission launched a public consultation on the minimum level of taxation on commercial diesel used by the road transport sector. In its original draft proposal, the Commission suggested three options: either to leave things as they are; or to introduce total harmonisation of excise duties at a level of e400 in 2018; or to bring national excise levels closer, within a fluctuation band defined at European level and not exceeding e100 in 2010.

Eight months on, as a result of these consultations, the Commission is now set to propose a draft directive in which it suggests a minimum tax level of e359 for 1,000 litres of fuel from 2012, then e380 from 2014. In view of the current high oil prices, the Commission will not be proposing an automatic indexation of the minimum level. It will not even propose a maximum level of taxation, in order to allow member states to set their own levels above the minimum European level. However, those member states which joined the European Union after 2004 (including Malta) and which have been granted transition periods, will have to respect the new limits as soon as these periods come to an end.

This new draft directive, which needs a unanimous vote to be adopted by the Council of Ministers, would amend the 2003 directive on taxing energy products.

The Commission is proposing this new directive because it wants to avoid what is termed as “petrol pump tourism” which is leading to different taxation on fuel in the EU member states. A good number of international road hauliers take the trouble to travel longer distances in a bid to fill up their vehicle’s tank in those member states where fuel taxation is low.

Once enacted, the new directive would further help in the reduction of air pollution since less trucks and heavy transport would opt to shop around for cheaper fuel. At present, the minimum taxation level on diesel is e302, and it will rise to e330 in 2010. The minimum taxation level on lead-free petrol is e359. The Commission’s draft directive aims to align the minimum taxation levels of commercial diesel and petrol. Nine EU countries which have been granted transition periods following their accession to the EU have a minimum level between e220 and e294. Another 13 member states apply a minimum level of between e300 and e400 while the remaining five member states have a minimum level above e400.

More information is available from Forum Malta fl-Ewropa on

2590-9101 or by email to [email protected].