ECJ may fuel tax cuts

The transport industry could benefit from a massive 70% cut on fuel duties
today when the European Court of Justice reveals its decision on whether goods
can be purchased from lower tax regimes without having to travel.

The main focus on the implications of the decision has been on the infamous
‘booze cruise’ and the internet ordering of tobacco and alcohol.

The ruling could, however, also apply to the purchase of fuel, allowing
transport companies with bunkering facilities in the UK to buy their fuel
abroad, where taxes are lower, and bring it into the UK.

The UK has the highest fuel tax Europe, paying 782 euros (£529.6) in excise
duty on 1000 litres of diesel. In Belgium and the Netherlands the duties are 342
euros and 365 euros per 1000 litres respectively, while Latvia has the lowest
duty at 235 euros.

‘The European Court’s decision is likely to mean that companies with
significant fleets of vehicles and the capacity to store fuel should be able to
buy from abroad at lower duty rates and have it delivered to the UK,’ said Peter
Penneycard, national director of tax at PKF.

The ruling will not have any effect on the fuel price at the pump, but
whatever the ECJ says the UK is likely to fight the decision because of the loss
of revenue from duties.

Experts anticipate that if the ECJ ruling goes against the government, the UK
will wait for an enforcement action from the European Commission before
complying.

‘We anticipate that the government will fight the European Court’s ruling
because of the cost of lost revenue, from alcohol and cigarettes in particular.
It is likely to need further “enforcement action” from the European Court to
make the UK Government and other EU states comply,’ Penneycard said.