Select Committee on European Union Twenty-Fourth Report

The Commission's forward programme

75.  A striking feature of the evidence we received was that, irrespective of their particular views on fuel duty, witnesses argued strongly that it was not appropriate to consider changes to this particular tax prior to and independently of the Commission's as-yet-unpublished proposals on the broader reform of transport taxation (centred on the forthcoming Framework Directive on Infrastructure Charging). To cite one of numerous examples: "CfIT's view is that it is not appropriate to consider different elements of the charging framework in isolation, since the different elements of the framework address different components of transport's wider costs in a complex and interdependent way" (p 18).

76.  In its defence, the Commission argued that it was not "realistic" to propose "a very complex package of measures" at one and the same time. "We already have this particular proposal […] we are coming up very soon with ideas regarding infrastructure charging […] It is a gradual progress across a number of fronts" (Q3). Moreover, these two proposals come under the jurisdiction of two separate Councils: the EcoFin Council decides on any proposals to change fuel tax whereas the Transport Council would decide on the Framework Directive.

77.  Granted that not all measures can be proposed in a single directive, the expert view was, as Professor Goodwin put it,

"that the sequence of policy development should be exactly the opposite of what the Commission is proposing. The first priority is to develop ways of making transport prices more sensitive to variations in environmental impact and congestion caused" (p 28).

78.  The ECMT and Professors McKinnon and Nash all argued that a reduction in UK fuel duty could become appropriate if and when a sufficiently comprehensive set of distance charges were put in place for all road users—whilst arguing strongly against the proposed reduction in fuel duty taken in isolation. Professor Nash concluded that this proposal was "premature" (p 33). In short, the view was that (a) the first priority should be the introduction of distance charges tailored to the variations in environmental impacts, and (b) it was not possible to establish the "right" level of duty on fuel without undertaking the broader reform of transport taxation, including the priority task of introducing distance charges.

79.  In any event, the adoption of the Energy Tax Directive will reduce the scope of the Commission's proposal on fuel tax to only a modest increase in regard to excise duty rates on diesel in some countries—alongside a larger reduction in others—and no change at all in regard to excise duty rates on petrol. The only significant impact of the present proposal is thus the large reduction in diesel fuel duty rates in the UK and other large Member States.

Key conclusions on the Commission's forward programme

80.  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.

81.  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.

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2003