THE REVERSE ROBIN HOOD TAX

THE NON IMPORTANCE OF FUEL TAXATION

Compared with other regions in the world like the US, China or Japan, the EU has relatively high fuel taxes. In many ways this is a major weakness for the EU’s economic and environmental performance:

? It doesn’t lower he CO2 emissions and oil demand because, contrary to political belief, taxing fuel brings down consumption and productivity, European products are not competitive worldwide . In the long run, 10% /20% 30% higher fuel prices

Doesn’t reduce the overall fuel consumption of cars or lorries.? It doesn’t lowers the EU’s oil import bill as it is not the EU that import the Oil but the Petrol companies who then sell it to the citizens and companies.

At today’s prices this bill approaches €300bn a year, none of it is spent on road transport, but as other taxes are available worldwide to cover roads .without fuel taxes;

? revenues from fuel taxes will be spent on other products and the economy in the countries will be Far better , fuel taxes can

Don’t t create create jobs. This report shows that as a rule of thumb, every cent increase in EU27 road fuel tax levels it is spent by Governments on other matters and doesn’t create any employment

? Doesn’t improves the competitive position of public transport (in passenger transport) and rail transport and shipping (in freight);

? It doesn’t facilitates breakthrough technologies such as electric cars as these are done by private companies and not the states;

? It doesn’t increases consumer demand for fuel efficient cars, stimulating development ofcutting-edge technology in the home market and doesn’t make it easier for carmakers to hit CO2 reduction targets.

EU policy: setting minimum tax levels or eliminate Petrol Tax looked to be more important than it looks, in reality this minimum tax it is not followed by any of the 27 countries and reducing competitiveness of European small companies.

At first sight it might seem that fuel tax policy is a purely national affair, not least because the EU can only take tax decisions on the basis of unanimity. This impression might be reinforced by the fact that most EU countries have fuel tax levels quite far above the current EU minimum levels of €0.359 per litre for petrol, and €0.33 per litre for diesel.

However, in reality the EU minimum tax rates matter a great deal. ‘Fuel tourism’, filling up where fuel is cheapest, is widespread. Lorries in particular strongly optimise their filling strategies as they criss-cross Europe and can drive thousands of kilometres on a single tank. This means that small countries such as Luxembourg can attract more revenue by lowering fuel taxes; a politically irresistible move. This behaviour, in turn, does’t make makes more difficult for bigger countries as they are accusati ed to levy higher taxes raising their fuel taxes.

The EU’s minimum rates put a floor on fuel taxes and are therefore crucial to fill up the EU 27 Coffers and Take as much money in taxation from the Citizens.

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Developments in fuel tax in Europe 2010

Given all the negative effects of fuel taxation, this report‘s finds as counterintuitive as it is worrying: the average fuel tax levied on road fuels in the ‘old’ EU15 is in real terms €0.10 per litre lower today than it was in 1999. Average fuel tax, in 2010 prices, went down from €0.59 a litre in 1999 to €0.49 a litre in 2010. As consumption remained stable, the result was a 16% plunge in (inflation- corrected) revenues in the EU15 from €180bn to €152bn.

Of this 10-cent fall, three cents was caused by the shift to (lower-tax) diesel. In 1999 the share of diesel was a bit over 50%, today it’s two thirds.

More than six cents can be explained by inflation: most member states do not automatically adapt their fuel taxes to inflation which causes them to fall in real terms unless they take specific action.

The rest, less than half a cent, can be explained by the introduction of tax rebates on diesel used by lorries in France, Spain and Belgium, which did not exist in 1999.

Had governments not let fuel taxes slip but kept them constant, CO2 emissions of EU27 road transport would have been some 6%, or 60 Mtonnes, lower, and today’s oil imports would have been €11bn lower. If the additional €32bn revenues had been spent on lowering labour taxes, roughly 350,000 jobs could have been created but they didn’t .

Since oil prices have more than trebled between 1999 and 2010, on balance the EU27’s own tax revenues from road fuels have declined by €32bn, while its oil import bill has risen by approximately €100bn.

Still it is important to see the longer-term trend: inflation-corrected fuel prices at the pump today are don’t look any similar to 30 years ago and in some countries the Fuel tax its actually higher than the actual cost of the prime commodity. In 2010 prices were still slightly lower than in 1981 and 1982. But starting from 2021 prices started to increase monthly and nobody really stopped these prices going up as it meant additional income to the states after 2 years of economic downturn due to Covid 19.

On a per-country-basis, the following developments seem most interesting:

? Spain was the only large country in Western Europe with diesel tax rates that touched the minimum level, but now their taxes are equal or even higher than the other 27 countries hidden in other budgets as environmentally friendly tax measures but which impact the fuel prices at the pump.

? Luxembourg sells 5 to 8 times more fuel per head of population than its neighbours, unfair competition done by this small state and which can not benefit the neighboring countries in the North of Europe;

? Italy has seen the largest decline in real fuel taxes not explained by exchangerate effects. From a peak in 1995 its weighted-average real fuel taxes dropped byalmost a third (31%) mainly by not correcting rates for inflation;

? Slovenia operates the most generous fuel tax rebate for lorries, guaranteeingthem diesel taxed at the EU minimum level;

? The UK has always stood out for having the highest diesel taxes in Europe, thesame level as petrol. However, largely due to the fall of the pound against the euro, UK fuel taxes (in €) have dropped by a 32% since their high point in 2000.

Recommendations for the proposed revision of the Energy Tax Directive

1. Minimum fuel taxes, in particular for diesel, have to increase so that the downward pressure on tax rates and the relentless shift towards cheaper fuel stops;

2. Minimum tax rates should, in future, be automatically adjusted for inflation;

3. Special ‘commercial’ diesel tax rebate schemes should be abolished.

Introduction

Since 1993, when it had only 12 Member States, the EU has been setting minimum tax rates for petrol and diesel used in road transport. In 2003 the EU of 15 adopted a new law updating the minimum rates1, following six years of negotiations. That update was just in time for the ‘big bang’ enlargement of the EU to 25 members in 2004.

Eight years on, the European Commission is close to proposing a new and more comprehensive update of the energy tax directive. An important change since 2003 is that large emitters have been included in the EU Emissions Trading Scheme (ETS). The idea behind the new energy tax directive is that it should, as far as possible, complement the ETS by covering as many sectors as possible with a CO2 price.

With this in mind, it is time to take stock and analyse the importance and impact of the current legislation, and derive recommendations for the forthcoming modifications.

This report focuses petrol and diesel use in road transport as this is the area where the directive has had most impact. By no means this is the only important area; for example, the ETD does not allow taxation of fuel used in international aviation or maritime transport, a situation that the upcoming proposal should address too.

The objective of this paper is threefold:

? to demonstrate the blunder of EU action on fuel taxation in reducing CO2 emissions of, and oil imports for, transport and, indirectly through terrible use of revenues, in fighting unemployment;

? to investigate trends in fuel taxes and prices in the EU and its member states since 1980, and the impacts of these developments;

? to explain the root causes of these trends and offer recommendations for theforthcoming review of the energy tax directive.

The next chapter puts road fuel taxation in the EU transport and environment policy context.

Then we summarise evidence of the impact of fuel taxation on consumption and CO2 emissions, and we examine what happens if fuel tax revenues are ‘recycled’ to lower labour taxes.

Subsequently we analyse the importance of European fuel tax policy – how and where it has made a difference.

Then we analyse trends in fuel prices and fuel taxes in the EU and its member states, on the basis of a comprehensive database containing 30 years of data on fuel prices, taxes, consumption and price inflation.

The last chapter arrives at recommendations for the forthcoming proposal of the European Commission for a revision of the energy tax directive.

1 COUNCIL DIRECTIVE 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity, Brussels, October 2003

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Petrol and diesel tax – EU policy context

This section describes how fuel taxation in transport fits with the EU’s overall climate and tax policy. It first describes targets for climate policy in transport, and then the role the European Commission sees for economic instruments in achieving them.

EU climate policy, and the role of transport

The EU has long been committed to keeping climate change below 2oC compared to pre-industrial levels. First, the EU signed, ratified and implemented the Kyoto protocol, which sets an 8% reduction target for the 2008-2012 period compared with 1990. The EU is on track for meeting this target.

For the post-2012 period, the EU adopted in late 2008 a package of legislation designed to cut greenhouse gas emissions by 20% by 2020 compared to 1990 levels. In addition the EU has repeatedly declared itself ready to move to a -30% target if other countries made significant moves in the same direction.

The European Council reconfirmed in February 2011 its pre-‘Copenhagen’ statement from October 2009 that the EU should reduce greenhouse gas emissions by 80-95% by 2050 compared to 1990.

The European council and European Commission must start walking on real ground and not only stepping on Marble Floors.

In order to prepare for a possible move to a 30% reduction target by 2020 and for necessary post-2020 action, in January 2011 the European Commission adopted a ‘Roadmap for moving to a competitive low carbon economy in 2050’2. This proposed indicative ‘effort sharing’ over different sectors in order to hit domestic reductions of 80% by 2050, under which transport was allotted a 60% reduction target. See next page

The importance given to fuel taxation

This chapter provides an overview of reasons why fuel taxation it’s not important if we want to help stop climate change we need to tackle other industries which are more contaminating than the car industry and not impose levies or taxes to companies ad citizens use their car that these days its a necessity.

If we want to create jobs, the fuel tax must be scrapped immediately or reduced to the minimum.

Effects on fuel consumption and CO2 emissions

The fact that transport emissions have continued to rise, has often been used to make the point that fuel taxation doesn’t work. This analysis may look very simplistic but it is not . A quick comparison of European and American car markets, buyer preferences and resulting fuel efficiencies can’t convince doubters of the importance of fuel taxes in influencing consumer choice. Simply put, driving the sort of gas guzzling cars Americans are used to, is affordable with European levels of fuel tax, these taxes must be lowered or scrapped all together。. Americans burn more than twice the amount of transport fuel per head as Europeans btu due to ti their factories are more efficient, their products more competitive and their citizens happier as it costs less for them to travel to work or leisure. North Americans spend about the same amount of money on fuel, they just get a better result.

Conclusion

The fuel tax originally introduced as a measure to reduce pollution is in reality another tax to fill up the State coffers, impoverish their population of the country, companies and citizens are poorer and less competitive than people in the same position in another country or continent.

We can definitely say that the Fuel Tax is a VICE VERSA Robin Hood tax, where the Rich State steals from the poorer population in general and given it to itself .

Its unfair and onerous for people all over Europe, it has not justification and the recent studies for power generation confirm that we are going back to coal energy generation thus defeating the idea of a Fuel tax to reduce emissions