German minister rejects French proposal to cap oil taxes

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German finance minister rejected on Monday a French proposal to put a ceiling on value added taxes for motor fuels.

2 June 2008   

FRANKFURT - German Finance Minister Peer Steinbrueck rejected on Monday a French proposal to put a ceiling on value added taxes for motor fuels.

He referred to a statement by eurozone finance ministers in 2005 in the English city of Manchester in which they agreed that short-term measures, in particular fiscal ones, were not appropriate responses to rising oil prices.

"We should stick to the Manchester declaration and not react politically or try to intervene," the German minister said ahead of a meeting of eurozone finance ministers in Frankfurt.

On Friday, French Prime Minister Francois Fillon urged European Union partners to debate a proposal to cap value added tax (VAT) on oil to help ease soaring fuel prices.

"This question will be discussed in the framework of the European Council"
summit on 19-20 June, Fillon said in Tallinn, Estonia, where he was on a tour of EU capitals before France takes over as EU president for a six-month term on 1 July.

Luxembourg Finance Minister Jean-Claude Juncker, who is chairman of the Eurogroup of finance ministers, said Sunday that the idea would be "discussed" in Frankfurt, where the group was celebrating the European Central Bank's 10 anniversary.

"I believe this idea does not correspond completely to the general inclination," Juncker told France Inter radio.

"But since I do not want to quash the debate, we will undoubtedly discuss the French proposals."

[AFP / Expatica]

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