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France to propose EU-wide VAT drop on petrol

French President Nicolas Sarkozy will ask other European Union leaders on Thursday to back a reduction in value-added tax on petrol across the 27-nation bloc to counter soaring oil prices, a senior French official said.



 

The proposal does not, however, have the backing of most heads of state and government attending a summit in Brussels, but a majority of states feels some action on fuel prices should be taken and there are a variety of suggestions.

Public anger at record oil prices has grown in recent weeks, prompting protests by truckers, fishermen and others from Spain to India, South Korea and Nepal. Cushioning the blow to European consumers will be a top priority at the summit.

The French official, who briefed reporters on the summit, said he expected the EU executive, the European Commission, would be asked to examine the various measures suggested by member states and report back to them.

"What we want is not to resolve the problem in one hour, naturally, but to give the Commission a mandate so that within a month it can have the possibility to study in full each of the proposals and to come back to the heads of state and government with a judgment and, if possible, concrete proposals," he said.

The other expected proposals included Austria's suggestion of a tax on speculators in the energy and raw materials sector, the official said, adding that Britain would have its own ideas.

EU leaders are set to express concern at the oil price surge but will say any measures should be "short-term and targeted", according to a draft summit communique.

The French official repeated, however, that Thursday's discussion would not reach a definitive conclusion.

"I think a majority believes that we cannot do nothing. This majority can be reached by adding the various proposals, each member supporting one proposal or the other," he said. 

"That is why I think it is reasonable, on the eve of this event, to think that the conclusion will be to give the commission a mandate to look at this subject thoroughly and come back to the heads of state and government in a month or a few weeks," he added.

Source : Reuters UK - UK,  dated 18/06/2008

 

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