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Hungary abolishes fuel duty for rail

Friday, January 15 2010

European Commission agrees!

Reference: IP/10/14 Date: 13/01/2010

The European Commission has decided today not to raise any objections to Hungary’s decision to refund or exempt from excise duties railway and inland waterways transport, to encourage their use and reduce pollution and other external costs in the transport sector.

Hungary applies excise duty exemption or refunds for fuel used in inland navigation and excise duty exemption for fuel used in railway transportation. The measures are in line with the provisions of the Energy taxation directive. The present authorisation covers the period until 30 April 2017.

Rail and inland waterway transport have much lower external costs in terms of accident, climate change and air pollution than road transport. As these transport modes have considerable spare capacity, they can also play a role in diverting traffic away from the congested parts of the road networks.

Since external costs are not charged to road freight transport, it is appropriate to reduce the gap between the cost of use of combined transport operations and of road transport in order to put cleaner transport modes on equal footing. Hungary opted for excise duty exemptions and refunds.

In deciding on necessity and proportionality of the measures which Hungary introduced for the benefit of cleaner modes of transport, the Commission focussed on checking that external cost savings per tonne-kilometre resulting from the use of cleaner transport modes instead of the road transport were higher than the corresponding aid amount per tonne-kilometre.

The decision follows the approach developed in the Commission’s previous practice regarding aid aimed at reducing external costs in the transport sector.

The fiscal measures applicable to inland navigation and railway transportation are compatible with Article 93 of the Treaty on the Functioning of the EU (TFUE) and Community guidelines on state aid for railway undertakings.

I suppose there is no chance of the UK, or even Poland, following in Hungary’s footsteps?

Source:

(Hat tip to The Railway Gazette and The Railway Eye.)

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