EU Plans to Increase Diesel Tax

By Christian Stampfer on 30 April 2011
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The European Union plans to increase the current tax level for diesel fuel till the year 2023.  Algirdas Semeta, the European Commissar for Taxes, presented a master plan for a new tax system which is strongly connected to the energy content of the fuel.

The existing minimum tax rate in the EU for diesel fuel is 33 cents per liter and 35.9 cents per liter for gasoline.  An EU member state can raise the amount of tax but cannot lower it.  Current tax rates for Germany are 47 cent per liter for diesel fuel and  65.45 cents for gasoline

Starting in 2023, the diesel tax rate will be required to be above the gasoline rate. This would lead to an increase of at least 19 cents per liter.

The reasons behind the new tax rates can be found in the Energy-Tax-Directive of 2003. This plan is designed to harmonize and standardize the tax system according to the energy content and CO2 emissions of fuel, whether it is diesel, petrol, fuel oil, or kerosene. Since the energy content and CO2 emissions of diesel are both higher compared to gasoline, the tax has to be higher as well.

In order for the new tax system to become law, every EU country has to approve the EU plan. If even one country if, for example Germany, votes against it, the measure will not pass.

Germany’s chancellor, Angela Merkel, as well as the president of the Verband der Deutschen Automobilindustrie (German Association of the Automotive Industry), Matthias Wissmann, have already publicly stated some opposition to the new plan.