Finance Minister offers no relief to small transport companies

Katainen rejects tax cuts for fuel

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Minister of Finance Jyrki Katainen (Nat. Coalition Party) says that the state can offer no relief to small transport companies that are suffering from sharp rises in fuel prices. Katainen says that there is no legal way that the rapid surge in diesel fuel prices could be reimbursed to the companies.
      “The only option would be to shovel money from the steps of the government building without a law”, Katainen said at a press conference on Wednesday.
      The soaring cost of fuel has caused problems especially for transport companies comprising just a few lorries, whose contracts do not allow passing on the higher fuel costs onto to the prices they charge clients.
      According to Finnish Transport and Logistics (SKAL), which promotes the interests of the transport sector, many companies are so short of money that they have been unable to pay their workers’ holiday pay.
      There have been calls from the National Coalition Party’s government partners, the Centre Party, and Minister of Economic Affairs Mauri Pekkarinen for reducing the tax on diesel fuel.
     
SKAL has proposed that some of the fuel taxes paid by the companies should be returned. Refunds totalling about EUR 20 million should be possible in principle, because the tax on diesel fuel in Finland is higher than what is required by the EU.
      “If the taxes for the early part of the year were refunded, it would amount to about EUR 650 per vehicle. I suspect that it would not help much”, Katainen noted.
      A bigger problem is that a tax refund would require legislative change. Considering that any changes in the law would require a lengthy legislative process, it would probably not take effect until 2011.
      Katainen is also generally opposed to cutting fuel taxes in order to offset higher prices. He notes that a fuel tax competition in the EU would give oil producing countries a reason to raise prices further, and to desist from increasing production. “We would be shovelling money into the pockets of the oil sheikhs”, Katainen said.
      The solution to the current problems facing the transport industry is to be found, in Katainen’s view, in the contracts for the transport sector, which he feels do not operate “according to the market economy”.


Previously in HS International Edition:
  Increased popularity of diesel cars pushes up fuel price (28.5.2008)

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