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Low fuel taxes cost jobs says T&E

28th April, 2011

A study by the European group ‘Transport and Environment’ shows that low fuel taxes are actually costing jobs well as increasing imports and emissions.

Average fuel tax in Europe has fallen in real terms by €0.10 per litre since 1999, which has cost 350 000 jobs. These are the findings of a new study by T&E, which coincides with publication of the Commission’s proposals to revise the EU Energy Tax Directive. The proposed revision seeks to narrow the gap between Europe’s differing rates of diesel tax but leaves untouched the current ban on taxing aviation and shipping fuels.

T&E’s report ‘Fuelling Oil Demand: What happened to fuel taxation in Europe?’, which was published earlier this month, sets out the prices of, and taxes on, petrol and diesel over the past 30 years. It says if taxes had been corrected for inflation and the revenues used to lower labour taxes, 350 000 jobs would have been saved, oil imports would have been cut by €11 billion, and road transport CO2 emissions would have been 6% lower.

See T&E article for further information.

But this only covers tax on fuel for surface transport, which is quite high already. Tax on aircraft fuel is zero, which means that the jobs, imports and emissions impacts will be far higher in proportion to the respective relative sizes of the surface and aviation sectors. We await a similar study concentrating just on aviation!