EC wants UK to cut lorry diesel tax

The Treasury is set to lose billions of pounds in tax revenue under European Commission proposals to harmonise excise duties on diesel for road hauliers.

Under the proposals, UK excise duties on diesel would have to be slashed by more than 50 per cent over the next seven years. The result would be sharp falls in the price of diesel for commercial use.

The plan, revealed in the Financial Times, is likely to be welcomed by British hauliers who have been lobbying for cheaper fuel.

However, it is expected to come under fire from the Government, which jealously guards its tax powers and would oppose any plan that would force them to lose revenues. A Treasury spokesman said: "We believe tax policy is the responsibility of member states. We have not seen this proposal yet so we cannot comment further."

The proposals would force EU states to harmonise their widely diverging duties towards a rate of about 350 euros per 1,000 litres of diesel. UK excise duty is currently more than 700 euros per 1,000 litres and raises £12 billion a year.

Duties in Germany would be cut by almost a quarter, while in other EU countries including Greece, Portugal and Luxembourg, duties and prices would have to rise.