THE EU will increase the amount of money available for emergency food aid for poorer citizens while governments are free to reduce excise duty on fuel and to levy windfall taxes on fuel companies.
The measures are part of proposals unveiled to tackle what was described as “a new kind of poverty in Europe” and was endorsed by leaders of the 27 EU countries at their summit in response to the crisis in food and fuel prices.
Leaders heard 16% of people in the EU live below the poverty line, as 100 million have been pushed into poverty because of the rising cost of food and oil.
Commission president, Jose Manuel Barroso, said Europe was facing a new kind of poverty with pressure on citizens not just from rising prices but also from debt.
There are no EU rules that stop governments helping the poorer sectors of society, he said.
“This is a global problem that Europe cannot solve alone… Governments are free to act with emergency measures for the weakest in society. The EU’s state aid rules do not stand in the way of helping private householders and those most affected by the current situation,” he said.
In the same way there was nothing in EU rules to prevent governments reducing excise duties on energy, he said. This should add to the pressure on the government to respond to demands from the road haulage sector in particular for a reduction in excise duty on diesel.
The price of diesel has increased by 30% over the past few months.
Every 20% increase in the cost of transport adds 1.3% to the household budget — and with the price of a barrel of oil predicted to increase to $200 by year-end, the pressure on people’s pocket will continue to grow, the commission said.
Mr Barroso said the longer-term answer to the fuel crisis is to decrease our dependency on oil by saving energy and diversifying from fossil fuels.
“The real answer lies in our climate change package, reducing energy consumption by 20% by 2020 and increasing renewables by 20%,” he said.
The price of food has also been increasing, partly because of poor harvests but also because of growing demand from countries like China and India.
Fuel costs also affect the price of food with a 30% rise in transport costs increasing the cost of processed food by about 3%.
The commission said it would increase its emergency food aid budget to €500m from €300m a year. The fund, started in 1987, has provided food aid to 13 million people in 19 member states since then. In the past, the food in intervention stores was used but since the butter mountains and milk lakes are no more, new ways of providing this aid will have to be found.
Governments are free to reduce VAT on food to 5% and the commission is carrying out a survey of the retail sector to see if it is delivering the best prices for consumers.
New funding to help the fishing industry has been put forward by the commission and will be discussed by fisheries ministers meeting tomorrow in Luxembourg.
This is on top of the €43m to help restructure Ireland’s white fish industry. Much of this will go to fishermen getting out of the business including retraining, while more will contribute towards more energy efficient vessels. Marine fuel has increased by about 240% over the past four years.
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