EU considers carbon tax for vehicles

The European Commission (EC) is investigating the feasibility of a carbon tax on road fuel in an effort to reduce emissions.

The tax, which has the backing of a number of EU member states, would be levied on road fuel and would be set at a minimum rate that individual countries could then raise if they so wish.

Although only a draft proposal, the EC suggested that a tax of upwards of £9 per tonne of carbon may be suggested as an initial band.

The UK government is opposed to any carbon tax on road fuel and will argue that the EC has no authority to introduce measures that affect national taxes.

The EC has been examining a carbon consumer tax because the current carbon trading system in Europe only manages to include less than half of the EU’s CO2 emissions.

Conceding that tax was a matter for member states, the EC is nevertheless arguing that some form of pan-EU policy on emissions was required if the internal market was not to be distorted.

The EC added that the tax would not be designed primarily to raise revenue but to alter consumer behaviour. The money would be used for “climate change purposes and to finance the climate change efforts of developing countries,” Laszlo Kovacs, the European Taxation Commissioner, said.