The position of the UK Government
82. The Government have strongly opposed the
Commission's proposal, which requires unanimity in the Council.
Indeed they have said that they intend to vote against the proposal
should it come to Council. As shown above, they have contested
each of the specific grounds on which the Commission rests its
case: competition, government revenues and the environment. In
his oral evidence, the Minister laid particular stress on the
negative impact of the proposal on the environment: "There
would be a substantial shift from rail to road [
] a 23 per
cent shift of freight movements from rail [
] an increase
in the amount of CO2 emissions from lorries (Q34)."
As was also shown above, on each of these specific points, the
Government's evidence is broadly in line with the evidence submitted
by independent experts.
83. At the same time, alongside these specific
objections, the Government have argued from the more general position
of a "principled approach". The Government's principle
here is that, when negotiating in the Council of Ministers, they
will "only allow departures from the freedom of Member States
to set tax rates and tax bases where there are strong and specific
reasons to do so" (Q26). How then do the Government support
the imposition of minimum rates of excise duty on fueland
indeed an increase in minimum rates embodied in the Energy Tax
Directive? Does this not also impinge on the freedom of Member
States to set tax rates and tax bases?
84. The Government's answer is that "on
the challenge of global warming," they accept that there
are "strong and specific reasons for acting across the EU"
(Q26). The problem with this answer is that every "departure
from the freedom of Member States to set tax rates and tax bases"
is justified by appeal to "strong and specific reasons"
but what constitutes "strong and specific reasons" is
always open to challenge. Presumably, the Commission believes
that there are "strong and specific reasons" to harmonise
fuel duty across the EU. In this particular case, the Government
are at one with the expert witnesses in challenging the reasons
given by the Commission. The strength of the Government's position
lies in the content of this challengenot in the appeal
to a general principle.
85. In view of the developing EU-wide debate
on the broader reform of transport taxationand especially
in view of the increasing EU-wide interest in the UK's own initiatives
on such issues as user charges for lorries and congestion charging
in Londonit is unhelpful to approach this debate by proclaiming
the principle of freedom of Member States to set tax rates. This
freedom exists unless Member States agree to set it aside and
the Government agree that there are sometimes "strong and
specific reasons" to set it aside. Hence, the UK is not in
disagreement with others on this point and nothing is gained by
inventing a disagreement where none exists.
Key conclusion on the position
of the UK Government
86 The Committee welcomes the Government's
submission of specific arguments on the Commission's proposal
on fuel duty and recommends that the Government frame its response
to future proposals on transport tax reform on the basis of the
specific merits and de-merits of each proposal.