LUXEMBOURG (AFP) — An Italian proposal to hit oil companies with a special windfall tax gained EU traction on Tuesday, with several countries willing to consider the measure as a response to record fuel prices.
Facing growing calls for government action in the face of record food and oil prices, EU finance ministers are struggling to come up with proposals to provide relief.
Italy's new Economy Minister Giulio Tremonti floated the idea, at a meeting with his EU counterparts in Luxembourg, of a so-called 'Robin Hood' tax that could be applied to oil companies and used to help those hit hardest.
"Given the dramatic needs of the lowest social levels, for us this kind of tax makes sense," Tremonti told reporters on the sidelines of the meeting.
Acknowledging that the idea remained to be "articulated," French Finance Minister Christine Lagarde said the ministers "concluded that all avenues deserved to be considered.
"It's certainly an intelligent proposal but the impact and its application have to be measured, not only in terms of record profits but also in terms of (the impact on) investment," she said.
Luxembourg Finance Minister Jean-Claude Juncker, who chairs regular meetings of eurozone finance ministers, said that "all ideas should be studied.
"But I personally am not against this idea," he added.
EU finance ministers are considering a range of measures to help consumers cope with record oil and food prices, which are due to be submitted to the bloc's leaders for discussion at a June 19-20 summit in Brussels
Lagarde claimed broad support among her counterparts for introducing more transparency into oil markets by publishing weekly oil stocks data, as is already done in the United States and Japan.
Despite growing pressure to act, the ministers ruled out short-term tax breaks for consumers as a way of providing relief.
"In the short run, we don't see any particular reason why we should take any tax measures to this end," said Slovenian Finance Minister Andrej Bajuk after chairing the meeting.
Instead, the ministers agreed that any measures taken should "be targetted especially to alleviate the pressure on low-income families," said Bajuk, whose country holds the EU's rotating presidency.
Facing blockades of French ports by striking fishermen, French President Nicolas Sarkozy suggested last week that VAT on fuel could be suspended when prices go too high, but EU finance ministers have largely played down that idea.
With oil trading at all-time highs in May, protests have broken out across Europe recently as inflation snapped back to a record 3.6 percent after easing to 3.3 percent in April.
"Ordinary people are increasingly suffering and we have to offer a response to those who are increasingly becoming poorer," Juncker said. "The European project is also about protection of normal, ordinary, average people."
Juncker said that one answer to the problems of soaring oil and food prices was "to address these issues at the G7 and G8 (Group of Seven, Group of Eight industrialised economies) level" and stressed that "we have to stay in continuous dialogue with the oil-producing countries."
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