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We do not harmonize taxes … we simply set minimum levels

Posted by Helen Friday, August 20, 2004

Some EU members, possibly emboldened by the new Commission’s stance on business and economic development, and worried by rising oil prices, have suggested cutting fuel tax. After all, the Commission now says that competitive tax levels are a good idea and, in any case, we need to become the most dynamic economy in the world by 2010 (or a little later).

So, has the Commission welcomed the Italian proposal to cut tax on fuel? Absolutely not. According to the spokesman, Gilles Gantelet,

"If a state decides to reduce an excise for a particular sector it amounts to state aid and must be notified to the commission."
This is not tax harmonization. Goodness me, no. Member states do have the right to lower fuel excise, as long as they do not go below a certain agreed minimum, agreed in 1992 and revised last year. But, of course, it may amount to state aid.

Are we to gather from this that the EU considers lower taxes an unjustified state aid?