Former Officials: EU Should Increase Taxes on Fossil Fuels to Plug Brexit Budget Gap


In a letter to leaders of the European Union, former senior EU officials said that the European Union should increase the taxes on fossil fuels in order to help meet the goals on climate change and fill a budget gap after Britain withdraws from the bloc.

European leaders will talk about its options for the next long-term budget of the bloc from 2021 to 2027 at a summit that is scheduled on Friday, and the taxes were not included among those that are laid out by the EU executive before the talks.

Instead, the European Commission suggested that a share of the revenue that is gained from national auctions of carbon permits under the cap-and-trade Emission Trading System of the bloc be utilised.

In the letter that was seen by Reporters on Wednesday and was dated February 20, 19 economists wrote: “We call on the EU to create a contribution of the oil, gas and coal sector to the EU budget.”

Former WTO director Pascal Lamy, Italian prime minister Enrico Letta, Belgian economist Paul de Grauwe and former German finance minister Hans Eichel were among the signatories in the letter.

They wrote that a “modest” price level of five euros for each ton of carbon dioxide on oil, gas, and coal that is burned in Europe would generate revenues of approximately 17 billion euros per year.

The said letter also proposed increasing the minimum diesel tax of the European Union, proposing a kerosene tax to tackle aviation emissions or imposing a minimum value added tax on airplane tickets.

Transport & Environment, climate campaign group that is based in Brussels, said that the letter added clout to policy debates regarding the use of taxes to tackle air pollution from transport, the largest source of emissions in Europe.

As a part of the Paris Agreement to limit global warming to no more than 2 degrees, the bloc has promised to reduce greenhouse gas emissions by a minimum of 40 percent below the levels from 1990 by 2030.