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Planned tax cut on fuel violates EU-restrictions

Hungary's plan to accelerate a tax cut for fuel would violate the bloc's rules, as the EU seeks to dissuade its 25 countries not to act alone in response to record-high oil prices, European Union regulators said. The European Commission holds that countries can't lower value-added tax on just one category of good or service, spokeswoman Maria Assimakopoulou told reporters in Brussels today. VAT, akin to U.S. sales tax, is governed by rules that are unanimously approved by national governments. Hungarian Prime Minister Ferenc Gyurcsány said two days ago the government would push up a 5 percentage-point cut, previously planned for all products on January 1, to as soon as possible for fuel. EU governments including France and Poland are weighing such moves in response to crude oil prices rising to a record $70.85 per barrel two weeks ago.