Luxembourg has the lowest petrol and diesel prices in the west of Europe
Luxembourg is expected to increase the excise on fuel within a month, the finance minister announced on Thursday.
Speaking at the opening of the Global Issues Network conference on Thursday, Pierre Gramegna (DP) described the actions Luxembourg was taking to reducing its CO2 emissions. “We will increase gas and diesel taxes by one or two cents [per litre] in one month,” he said, explaining that it was being introduced alongside annual investments of €500m in environmental and green infrastructure or in climate change mitigation. “That’s one quarter of all our investments,” he said.
At the sidelines of the conference, Gramegna told Delano that it was difficult to have a clear figure on how much revenue the measure would generate. “We will do a specific study during the year to see how this increase will impact tax revenues,” he said. “We will make sure the increase in excise duties will in parallel bring measures in social areas and the environment. That’s the idea.”
Luxembourg currently has the lowest petrol and diesel prices in the west of Europe, making it attractive for freight firms to refuel as well as attracting private citizens to fill up.
The news was not well received by oil industry federation Fedil, which said that while it respected the government's political will as a measure to help achieve the objectives of the Paris agreements, it would have preferred a more moderate, phased approach.
Jean-Marc Zahlen of Fedil told Delano on Friday: “The oil sector cannot, of course, be satisfied with such a measure, which may seem trivial to a private individual, but which could have significant consequences on sales in Luxembourg (and therefore also on State revenues).”
He added: “This increase will affect a significant customer base, namely professional lorry drivers in transit from Belgium, since it should be noted that Belgium has an excise refund system for professionals. Thus, the level of excise duty on diesel in Luxembourg with the increase of 2 cents per litre will be higher than the level of excise duty on diesel in Belgium for professionals after being refunded!”
Zahlen further said the federation was open to discussions to find other measures to help achieve the climate objectives.
Other climate change measures already implemented in Luxembourg include the introduction of the tram in Luxembourg City and the construction of train stations at Pfaffenthal-Kirchberg and Howald. In future, further park and ride facilities will be built or expanded and in March 2020, all public transport in the country will be made free of charge.