The European Union executive’s plan to tax high-energy fuels, which could increase the price of diesel, has placed Brussels at odds with Germany, the biggest vehicle producer in the continent. The blueprint proposes to increase the minimum levy on diesel in line with gasoline, making motor fuel taxes more eco-friendly.
The proposal could become EU law by 2013. However, through this initiative, Germany would have to raise its tax on diesel to 75 cents per liter by 2020 from 47 cents. Such tax increase would contradict with Berlin’s financial support for the diesel.
Approximately 50 percent of the new cars registered in Europe utilizes diesel, and such scenario has benefited many German automakers like Daimler and BMW. Chancellor Angela Merkel of Germany has expressed opposition to the Brussels initiative even if it would be staged in over ten years.
On the other hand, the European Commissioner Algirdas Semeta, who is in charge of taxation, said that the common goal is to have an EU economy that is greener, more resource-efficient and more competitive, and that the initiative sets a strong CO2 price signal for consumers and businesses.
The EU aims to cut by fifth its carbon dioxide emissions over the next 10 years to minimize climate change.
However, the current tax system on energy consumption across Europe weakens such aim, as coal, which is the biggest polluter, has the lowest levies, while bioethanol, which is one of the least carbon-intensive, has the highest burden. Countries across Europe vary in the way they tax energy.