Fuel Tax Havens” Are Pushing Fuel Taxes Downwards, Undermining the Climate Policy and Fiscal Sovereignty

Can EU prevent transport fuel tax competition between member states by copying the USA/Canada IFTA model?

Magnus Nilsson Senior Campaigner European Federation for Transport & Environment (T&E)

www.transportenvironment.org European federation for Transport and Environment (T&E)

45 member organisations in 25 countries Brussels office 14 staff Follows transport related environmental issues within EU and UN Financing: Private funds, EU Commission, governments

www.transportenvironment.org Why is diesel tax competition a problem?

EU ETS Common reduction goal to be achieved through emission trade

Effort-sharing National reduction goals to be achieved by ways decided by MS

www.transportenvironment.org Why is diesel tax competition a problem?

Limits the fiscal sovereignty Increases the MS costs for complying with the Effort-Sharing Decision

www.transportenvironment.org The Energy Tax Directive – the constitutional set-up

1. Council takes all decisions – EP can only give opinion. 2. Unanimity needed – all 27 governments have to agree. 3. Very weak legislation.

www.transportenvironment.org ”Fuel tax havens” are pushing fuel taxes downwards, undermining the climate policy and fiscal sovereignty

“Big trucks have tanks of huge capacity, which allow them to cover between 1 500 and 3 000 kilometres on a single tank /…/ That means in reality that hauliers involved in international activities conduct a kind of fiscal planning: they take advantage of the very significant differences in national excise duties on diesel fuel by filling up in Member States with the lowest taxes .” COM(2002) 410 final

http://www.satellite-sightseer.com/id/10759/Luxembourg//Bettembourg/Aire_de_Berchem

www.transportenvironment.org ”Fuel tax havens” are pushing fuel taxes downwards, undermining the climate policy and fiscal sovereignty

Country Diesel tax Petrol tax Ton CO 2/capita €/1000 l (aug €/1000 l (aug from road 2011) 2011) transport (2008) Germany 470,40 654,40 France 437,10 611,00 Netherlands 429,50 724,17 Belgium 432,89 613,57 Luxembourg 310,00 462,09

www.transportenvironment.org ”Fuel tax havens” are pushing fuel taxes downwards, undermining the climate policy and fiscal sovereignty

Country Diesel tax Petrol tax Ton CO 2/capita €/1000 l (aug €/1000 l (aug from road 2011) 2011) transport (2008) Germany 470,40 654,40 1,75 France 437,10 611,00 1,87 Netherlands 429,50 724,17 2,17 Belgium 432,89 613,57 2,65 Luxembourg 310,00 462,09 13,1

www.transportenvironment.org ”Fuel tax havens” are pushing fuel taxes downwards, undermining the climate policy and fiscal sovereignty

Fuel tax revenues, €/head/yr

Sources: EU Commission Oil bulletin, Eurostat

www.transportenvironment.org ”Fuel tax havens” are pushing fuel taxes downwards, undermining the climate policy and fiscal sovereignty

Diesel tax revenues per person, 2010 Source: Excise duty tables, TAXUD n.a.

www.transportenvironment.org ”Fuel tax havens” are pushing fuel taxes downwards, undermining the climate policy and fiscal sovereignty

1.60

1.40

1.20

per per litre 1.00 €

0.80

0.60

0.40 diesel

petrol nominal sales price, salesnominal 0.20 weighted average

0.00 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 20004 2002 2006 200 2008 2010

Nominal motor fuel prices EU9, € per litre (incl VAT)

www.transportenvironment.org ”Fuel tax havens” are pushing fuel taxes downwards, undermining the climate policy and fiscal sovereignty

1.60

1.40

1.20

1.00

0.80 of per2010 litre € 0.60

0.40 diesel

petrol 0.20 weighted average realsalesprice,

0.00 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Real motor fuel prices EU9, € per litre (incl VAT)

www.transportenvironment.org ”Fuel tax havens” are pushing fuel taxes downwards, undermining the climate policy and fiscal sovereignty 0.80

0.60

0.40

0.20 diesel real fuel tax, €tax, real fuel (2010)litre per petrol

weighted average 0.00 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Real motor fuel taxes EU9, € per litre (excl VAT)

www.transportenvironment.org Impact of ETD on real taxes

Petrol: Limited

Petrol tax aug 2011, €/1000 l Source: Oil bulletin, aug 2011

www.transportenvironment.org Impact of ETD on real taxes

Diesel: Strong

Diesel, tax aug 2011, €/1000 l Source: Oil bulletin, aug 2011

www.transportenvironment.org Impact of ETD on real taxes

Diesel: Strong Increasingly influencing petrol taxes

Diesel, tax aug 2011, €/1000 l Source: Oil bulletin, aug 2011

www.transportenvironment.org New ETD proposal: From 2023 technically neutral fuel taxation Diesel tax, €/1000 l

3 02 2 om Fr

Diesel min 2018 2015 2013 Today

Petrol tax, €/1000 l Petrol min Petrol

www.transportenvironment.org How can tank tourism be counteracted?

Method Tried Problem/weakness Minimum taxes ETD Causes “race-to-the bottom” Minimum taxes + Revision ETD Causes “race-to-a- technical neutrality somewhat-higher bottom” Harmonisation Com proposal 2002 Politically impossible (UK…) Non-coordination IFTA (US & Canada) Would Luxembourg accept it?

www.transportenvironment.org IFTA (International Fuel Taxation Agreement

Question: Why is there no fuel tourism in US?

www.transportenvironment.org IFTA (International Fuel Taxation Agreement

Question: Why is there no fuel tourism in US?

Answer: IFTA (International Fuel Tax Agreement)

www.transportenvironment.org International Fuel Tax Agreement

Agreement between the 48 “contiguous” (mainland) US states and the ten provinces of Canada. Federal legislation gives IFTA monopoly.

Grew from co-operation between individual US states

Modelled after IRP, International Registration Plan – agreement from the 1970´s between US states to facilitate interstate traffic

Basic idea : IFTA distributes fuel tax revenues according to estimated fuel used in each state by heavy duty vehicles (above 26 000 lbs = 12 tons)

www.transportenvironment.org International Fuel Tax Agreement - how it works Basic documentation for each vehicle: 1. Driven distance in each state (from log book in each vehicle) 2. Fuel bought, total and per state (receipts from filling stations) With this you estimate: a. Average fuel consumption (gallons) b. Fuel used in each state (a x driven distance) c. Fuel taxed debt or claim in each state (fuel tax payed - (b x state fuel tax))

www.transportenvironment.org International Fuel Tax Agreement - how it works Basic documentation for each vehicle: 1. Driven distance in each state (from log book in each vehicle) 2. Fuel bought, total and per state (receipts from filling stations) With this you estimate: a. Average fuel consumption (gallons/mile) b. Fuel used in each state (a x driven distance) c. Fuel taxed debt or claim in each state (fuel tax payed - (b x state fuel tax))

www.transportenvironment.org International Fuel Tax Agreement - how it works And then: Net debt or claim for each haulier’s entire fleet is regulated with the home state of the haulier. The haulier only communicates with the home state.

Net debt or claim for all hauliers in each state is regulated with the other states through IFTA clearing house mechanism.

www.transportenvironment.org An example