Sarkozy calls for capping Europe-wide VAT on oil

27th May 2008, Comments 0 comments

The French president proposal to suspend value-added tax on oil across the European Union will help countries to deal with soaring prices of oil.

27 May 2008

PARIS - French President Nicolas Sarkozy on Tuesday proposed capping value-added tax on oil across the European Union to help countries deal with the soaring price.

"I want to ask the question to our European partners: if oil continues to increase, should we not suspend the VAT taxation on the price of oil," Sarkozy said in a radio interview.

He spoke as French fishermen kept up protests over high fuel costs launched three weeks ago and Spanish fleets went on strike to press demands for government compensation.

French consumers pay about 19.6 percent VAT on the price of fuel.

Oil prices have soared to more than USD 130 per barrel in recent months.

Sarkozy suggested that EU leaders could set a cap on the tax, based on the barrel price.

"It is out of the question to promise this, because naturally, I can't decide it on my own," he added.

"But I gather that France is not the only country confronted by the rise in the price of oil."

France is to take the helm of the 27-nation European Union in July.

"I am saying to the French people, oil is going to continue to increase," the president added.

In the meantime, Sarkozy said France would channel all additional revenue from VAT on oil products "into a fund that will enable us to help the French people who need it most cope with this increase."

He predicted the fund would generate between EUR 150 and EUR 170 million per quarter.

[APF / Expatica]

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