EU pledges tax breaks to counter oil price rise[fr][de] 

The measures will be unveiled in detail in the coming days so that EU heads of state and government can debate them at a summit in Brussels on 19-20 June, the Commission said. The proposals will include:

• A revision of the energy taxation directive and the 'Eurovignette' directive, which allows EU countries to charge road users (to be presented this year);
• a report on the use of tax incentives, including reduced VAT rates to encourage energy savings (in the autumn), and; 
• proposals on the transparency of commercial oil stocks (by the end of the year).

In the short term, the Commission said it will allow EU countries to provide "targeted support" to poorer households provided that the measures are "temporary, non-distorting and do not inhibit longer term adjustment to higher prices".

Commission spokesperson Johannes Laitenberger also suggested that the Commission could consider taxing the "windfall profits" that energy firms pocketed by charging their customers for the cost of CO2 pollution permits that they initially received free of charge.

"All of these issues that are part of the debate at EU level and member-state level are obviously being considered," Laitenberger said at the Commission's daily press briefing on Wednesday. "It's still part of the fine-tuning."

Over the past weeks, Brussels has been anxious to discourage EU countries from taking hasty measures to alleviate fuel price rises in the hardest-hit sectors of the economy.

Reacting to fishermen's protests about rising fuel costs earlier this month, the Commission warned against starting a "vicious circle" whereby if lower taxes are approved for fishermen, "road haulers, taxi drivers and so on will seek the same special treatment". It said it would also send a bad signal to oil producing countries that EU nations are ready to absorb higher prices on taxpayers' backs. (EurActiv 02/06/08).

The central part of the Commission's response is therefore long term. "The major policy response must be to make the EU more efficient in the use of energy, and less dependent on fossil fuels," the EU executive said in a statement.

"At the heart of our approach is the full implementation of the Commission's energy and climate change proposals including increased energy diversification, security of energy supply and energy efficiency," said Commission President José Manuel Barroso.

According to the EU executive, the response to rising oil prices "should be based on the assumption that prices are likely to remain high in the medium to long term".