Commentary article by: Adam Walder
The European Commission recently criticised Luxembourg for its low taxes on fuel which, according to them, eventually leads to increased levels of pollution in the country due to “fuel tourism” i.e. Luxembourg’s neighbours crossing the border to fill up their vehicles with fuel thanks to the lower prices.
But this is not the first time the Grand Duchy has faced this issue. It wasn’t that long ago a report was released by the OECD (Organisation for Economic Co-operation and Development) highly critical of Luxembourg for fuel tourism.
OECD Secretary General Angel Gurria, presented an environmental report to the Grand Duchy containing a fuel tourism study, stating that it was a pollution issue while also scolding the Grand Duchy in relation to the amount of money received by the state as public money, and therefore lost revenue, as the government is reluctant to increase prices.
When a car needs fuel - it needs filling
But isn’t all this all a bit narrow-minded? Isn’t it just looking at the issue like a blinkered horse and not the full picture? If you scratch the surface and dig a little deeper one soon realises that fuel tourism is in fact not the area we should study to combat traffic pollution.
Yes, there is a lot of fuel tourism in Luxembourg, and many motorists make trips to Luxembourg especially to fill up, something that is nothing new. However, if prices are increased to the levels of France, Germany and Belgium and fuel tourism ceases, has the problem really gone away?
When a car needs fuel - it needs filling, pure and simple. If it is not filled up in Luxembourg, it is filled up in the country of residence meaning that we just shift the problem elsewhere.
Let’s also look at where and when most traffic pollution occurs. Is it when a vehicle is filling up at the service station, or is it when driving? We all know the answer to that! Therefore if, for example, a German comes over the border to Remich to fill up and returns back to Germany, where is the pollution actually taking place?
It is easy to point a finger at fuel tourism as a traffic pollution issue for Luxembourg, but that’s not the full picture. The Grand Duchy is a victim of its own location. It always has been, and always will be a transit country for long-distance traffic. Admittedly some traffic does pass through Luxembourg especially for a service station stop, but if you took away the service stations or increased fuel prices, will the motorway traffic decrease thus reducing pollution? I think not! The motorway route through the Grand Duchy is attractive in its own right for onward journeys.
High-speed transit traffic a cause of pollution
Traffic pollution therefore is caused mostly by transit high-speed traffic and not fuel tourism. This is where the government should be focused on and the European Commission and OECD should have sighted in their reports. It seems that fuel tourism is being used as a bit of a scapegoat.
The OECD report also criticised the Grand Duchy for lost state revenue due to low taxes on fuel, but hold on a minute, this is also very short-sighted! Increase fuel prices to the rates of other countries means that service station clientele will drop and basically be only Luxembourg residents. There is a chance that for the state to earn the same rate they receive now through fuel tax, they’d actually have to make it even more expensive than neighbouring countries! Wouldn’t that be ironic?
Let’s also not forget that there’s a whole industry behind service stations in Luxembourg, especially at borders. Increasing fuel prices could well see businesses crumble.
However we are not likely to see fuel taxes rise soon as, in reply to the European Commission’s report last year, former Prime Minister Jean-Claude Juncker firmly stated that “fuel prices will not increase in Luxembourg” and that such a policy was "not suitable for our country".
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