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Sarkozy calls for Europe-wide cut in fuel tax

Article published on the 2008-05-28 Latest update 2008-05-28 15:15 TU

Oil prices in France have hit new records(Photo: AFP)

Oil prices in France have hit new records
(Photo: AFP)

In an effort to ease the anger over soaring fuel prices, French President Nicolas Sarkozy proposed a Europe-wide cut in oil tax, while EU ministers called for direct aid to help the beleaguered fishing industry. Police cleared fishermen's oil depot blockades in Marseille, but their northern counterparts continued to prevent any movement in or out of the ports.

"I want to ask the question to our European partners: if oil continues to increase, should we not suspend the VAT taxation on the price of oil?" Sarkozy said in a radio interview Tuesday.

French Agriculture Minister Michel Barnier, who is in Slovenia for an informal meeting with his EU counterparts, said that they had agred that "a budget should be earmarked" to help the fishermen.

But a European Commission spokesperson warned against changes to VAT on oil products, saying that it would be "a very bad signal that we do not want to send".

Austrian Finance Minister Wilhelm Molterer said Wednesday that he disagreed with the Sarkozy plan to cut taxes. "What will you do when prices fall again, reintroduce the tax? I'd like to hear the political discussions then," he said.

Austria will give more tax breaks to commuters, however, to ease the oil price burden.

As oil prices soared to over 84 euros per barrel, fishermen and lorry drivers throughout Europe also staged protests.

Hundreds of angry lorry-drivers in London handed in a petition at the Prime Minister's residence at 10 Downing Street demanding a rebate in fuel tax.

Writing in Wednesday's Guardian newspaper, British Prime Minister Gordon Brown called for a global oil strategy, saying it should be the top priority at the upcoming G8 summit in Japan in July.

In Spain, lorry-drivers joined striking fishermen to call on their government to subsidize the soaring costs.

Italian, Greek and Portuguese fishermen may strike later this week.