Verhoftstadt proposes petrol price tax freeze

25 October 2004

BRUSSELS – Belgian Prime Minister Guy Verhofstadt has called for a freeze on petrol excise taxes in a move sure to be criticised by his EU counterparts, it was reported Monday.

“Let us suppose that the price of diesel climbs to 1.10 EUR, 1.20 EUR or EUR 1.30 per litre,” Verhoftstadt said over the weekend.

At those levels, an alternative model of calculating excise taxes would allow a price reduction for the consumer, he said.

However, in a television interview, he said the government has not yet decided on any concrete measures.

Excise duties account for nearly half the price of unleaded petrol in Belgium.

Verhofstadt said that the state is one of the main beneficiaries of the increase in the price of motor fuel, implying that the state could pass on any savings to consumers.

Normally there would be a two-step process for doing this: first by fixing a Europe-wide price ceiling, and then agreeing not to raise taxes.

But leaders from other European countries reacted angrily to Verhofstadt’s suggestion for a price freeze in Belgium.

Last week, French Finance Minister Nicolas Sarkozy was criticised by colleagues for insisting on unilateral fiscal measures such as a tax rebate to offset the impact of the recent surge in oil prices on industry.

World oil prices ballooned to a record $55.50 Friday amid concern over US energy stocks before the winter.

German Finance Minister Hans Eichel critised France’s move as a “distortion to competition,” while a European Commission official told La Libre Belgique newspaper that there was “no possibility” of unilateral action by a single EU member state.

Subject: Belgian news