Seeing red about diesel

It’s just unbelievable. VVD (sort-of-libertarian), CDA (christian centrist) and PVV (right-wing populist) just spent weeks haggling over a new budget. Finally the whole thing blew up, we’re getting new elections in September, but in the meantime CDA and VVD managed to agree with a bunch of other parties, including the Green Left (yes, that’s their name) and the sort-of-liberal D66, within 48 hours. Was it really that easy? What have they been doing in those past weeks?

Anyway, part of the deal is a tax increase on so-called ‘red diesel’, i.e. diesel with a lower tax rate than regular diesel. It is only allowed in such machines as tractors, road maintenance equipment – and all non-recreational ships. No wonder Dutch fishers are up in arms. Fuel is one of the major expenses of Dutch bottom trawlers.

I hate to say this, but as an economist I don’t see a reason to exempt any economic sector from a tax, let alone a tax on fossil fuels. If farmers and fishers pay a lower tax rate, why not trucks? Or salesmen? As we’re on it, why not abolish the tax altogether? Oh wait – there’s state coffers to fill and negative externalities to tax. But in any case, I think we should have a level playing field for all, and that includes a similar tax rate for all.

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