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It is necessary to find a way to close those two gaps at the same time. If they are approached separately, the solution for one might worsen the other. Actions also need to be coordinated at EU level. If it would happen at an individual member state level, other member states could decide not to act and therefore, benefit from more acute fuel tourism.
Ideally, the solution to close these two gaps is to revise the Energy Taxation Directive. It is one of the few tools that ensure positive impacts for the economy, energy independence, wealth redistribution and the climate, as presented in previous sections. With oil prices currently low, it seems the right moment to modify the ETD.
The ETD is based on a numbers-and-timetables approach. It could be replaced by a principles-based one that has the potential to generate more support among member states. For instance, it could include minimum rates that are inflation adjusted, or values that go up if oil prices go down. It could also include guidelines for national decisions: every national decision, from now on, should narrow the gap between petrol and diesel tax for cars. It could not allow member states to widen the gap between the two.
a study by Regarding fuel taxes for diesel used by trucks, the EU could learn from the US-Canada model: the International Fuel Tax Agreement (IFTA)56. Under this system, truckers pay their fuel tax depending on where they drive. It would end fuel tourism, avoid tax leakage and allow full fiscal independence by individual member states.
IFTA: a model to follow The International Fuel Tax Agreement, or IFTA, is a fuel tax agreement that operates in the US and Canada. Under the IFTA, truck operators (hauliers) record distance travelled and fuel consumed within each state/province (jurisdiction). Tax paid where fuel is purchased is later reconciled against actual use. Thanks to this reconciliation process, hauliers obtain a rebate from some jurisdictions and pay additional taxes to others. Significant differences in tax rates between neighbouring states/provinces are sustained under this system because the haulier ultimately pays tax at the rate where travel actually takes place. For example, Pennsylvania’s fuel tax is approximately 46 cent per gallon higher than New Jersey’s, but thanks to the IFTA, tax distortion (‘fuel tourism’) does not occur.
To know more about this system, check a briefing by Green Budget Europe and T&E on the subject:
http://www.transportenvironment.org/publications/towards-european-fuel-tax-agreement Even if the VW scandal creates momentum to raise the minimum level for diesel, changes to the ETD are not in the Energy Union communication57, so it seems unlikely that it will happen. On the other hand, it does mention that the Commission “will promote the use of road charging schemes based on the polluterpays and user-pays principles”. This new scheme should have a CO2 component that would tackle road emissions.
It should be complemented by a road pricing scheme with a clear CO2 component. It is not currently allowed in the Eurovignette Directive for heavy goods vehicles, either for cars in general. Member states should be allowed to charge vehicles based on distance travelled and based on the how polluting the vehicle is. Even if fuel tourism would continue to exist, member states could actually take their own decisions without necessarily having to look to their neighbours for action. An European framework is needed to avoid market distortions and to level the playing field.
For more details, check a briefing by Green Budget Europe and T&E on the subject:
http://www.transportenvironment.org/publications/towards-european-fuel-tax-agreement European Commission, 2015. A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy.