EU to keep stance against fuel tax cuts
European Union finance ministers will stick to their previous agreement not to cut taxes on fuel as a way of responding to high inflation, European Economic and Monetary Affairs Commissioner Joaquin Almunia said. "Ministers at the Ecofin and the...
European Union finance ministers will stick to their previous agreement not to cut taxes on fuel as a way of responding to high inflation, European Economic and Monetary Affairs Commissioner Joaquin Almunia said.
"Ministers at the Ecofin and the Eurogroup level agreed in Manchester (in 2005) a clear position and they will stick to it," Mr Almunia told reporters yesterday.
French President Nicolas Sarkozy said on Tuesday the EU should consider freezing sales tax on fuel if the oil price continued to rise.
The Eurogroup - eurozone finance ministers and European Central Bank President Jean-Claude Trichet - meet on Monday morning in Frankfurt for a monthly discussion of the economy of the 15 countries sharing the single currency.
After a sharp rise in oil prices in 2005, EU ministers agreed in Manchester to refrain from reacting with tax cuts so as not to artificially support demand for fuel and avoid sending the wrong signal to oil producers.
"Increases in oil prices are a matter of concern," Mr Almunia said. "In the short term, inflationary consequences are serious."
Surging oil and food prices boosted consumer inflation in the eurozone to an all-time high of 3.6 per cent in March, and economists expect price growth could be at such levels again in May after oil prices hit record peaks close to $135 a barrel.
Oil prices jumped to around $71 per barrel in early September 2005 from around $44 at the start of the year. Since then, oil prices have almost doubled.
Mr Sarkozy, under pressure from fishermen protesting about the prices, said if oil costs continued to rise, the EU should consider freezing the value-added tax at a certain level. He did not fully explain his idea.
"Ministers at the Ecofin and the Eurogroup level agreed in Manchester (in 2005) a clear position and they will stick to it," Mr Almunia told reporters yesterday.
French President Nicolas Sarkozy said on Tuesday the EU should consider freezing sales tax on fuel if the oil price continued to rise.
The Eurogroup - eurozone finance ministers and European Central Bank President Jean-Claude Trichet - meet on Monday morning in Frankfurt for a monthly discussion of the economy of the 15 countries sharing the single currency.
After a sharp rise in oil prices in 2005, EU ministers agreed in Manchester to refrain from reacting with tax cuts so as not to artificially support demand for fuel and avoid sending the wrong signal to oil producers.
"Increases in oil prices are a matter of concern," Mr Almunia said. "In the short term, inflationary consequences are serious."
Surging oil and food prices boosted consumer inflation in the eurozone to an all-time high of 3.6 per cent in March, and economists expect price growth could be at such levels again in May after oil prices hit record peaks close to $135 a barrel.
Oil prices jumped to around $71 per barrel in early September 2005 from around $44 at the start of the year. Since then, oil prices have almost doubled.
Mr Sarkozy, under pressure from fishermen protesting about the prices, said if oil costs continued to rise, the EU should consider freezing the value-added tax at a certain level. He did not fully explain his idea.