EU to propose lifting diesel taxes to avoid 'tank tourism'

(BRUSSELS) - The European Commission is to propose next week lifting minimum diesel taxes to discourage hauliers from tanking up in EU countries with the lowest rates, according to a document seen by AFP on Thursday.

Despite an EU-wide floor for such taxes, rates vary widely among member states, which encourages "tank tourism," where international haulers avoid filling up in countries with high diesel taxes.

The practice distorts competition and costs finance ministries in countries with the highest rates precious revenues, the document said.

It said that "the differences in fuel costs can be as high 20 percent on a 1,000 kilometer (620 mile) route."

Since 2004, the minimum tax allowed in the EU is 302 euros (394 dollars) per 1,000 liters, and this is supposed to rise to 330 euros in 2010.

The commission proposes to lift the rate to 359 euros in 2012 and then again to 380 in 2014 to limit variations among member states.

Currently, nine EU states, mainly new members in Eastern Europe, have a special derogation to charge rates between 220 and 294 euros during a transition period.

Five other member states have rates over 400 euros while Britain charges a tax of 693 euros.

Like all matters of tax harmonisation in the EU, the proposal requires backing from all 27 member states to go into effect. A similar proposal put forward in 2005 failed.