Member states back hauliers’ tax breaks

Date: 08/05/02

By Peter Chapman

EU GOVERNMENTS have directly challenged the European Commission by backing a system of controversial tax breaks on fuel for road hauliers.

The Commission said the tax breaks amounted to illegal state aid, but member states unanimously disagreed. Their decision means the Netherlands, Italy and France can continue to apply reduced excise duty rates for truckers.

As part of the deal, Germany and Spain also negotiated the right to keep huge subsidies for their coal industry; Belgium kept an insurance tax break and Austria was allowed to limit heavy goods traffic through the Alps.

The decision was taken under the little-used Article 88 of the EU Treaty, which allows governments to over-rule the Commission 'under exceptional circumstances' provided every member state agrees.

Brussels is already challenging the legal loophole to fight a ruling on aid to Portuguese pig farmers.

Commission officials said it would examine its options before launching a legal challenge in the European Court of Justice in the latest case.

Michael Tscherny, spokesman for Competition Commissioner Mario Monti, said the governments' move was not a surprise since the Council of Ministers had supported tax breaks for hauliers two years ago and was reluctant to see them phased out.

'I think we should be careful [before we] portray this as a precedent,' he added.

EU governments have directly challenged the European Commission by backing a system of controversial tax breaks on fuel for road hauliers.