Battle lines drawn on single fuel tax

PLANS to harmonise and increase tax on diesel and unleaded petrol and to harmonise vehicle registration tax will bring Finance Minister Charlie McCreevy on a collision course with the European Commission.

McCreevy and British Chancellor Gordon Brown insist Europe must play no part in deciding what taxes individual countries levy on their citizens. But the European Commissioner for the Internal Market, Frits Bolkestein, has declared war on the issue by proposing to bring taxes on cars and diesel into line in all 15 member states.

He points out that all the governments have signed up to creating a single market for goods and services throughout the EU. But when one country charges less tax than another on goods such as diesel, the market becomes distorted.