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PARIS - EUROPEAN leaders were struggling yesterday to defuse growing anger over soaring fuel prices, with attention focused on a call by French President Nicolas Sarkozy for a Europe-wide cut in fuel taxes.
Fishermen and truck drivers are in the vanguard of protests across western Europe over rising fuel costs, amid recent record global oil prices, which eased slightly yesterday to US$127 (S$173) a barrel.
Portugal has already called for the European Union to hold an urgent debate on the crisis, to identify 'short- and long-term measures' to minimise the effect of high oil prices.
But Europe's political leaders were under no illusion that the problem was going to go away.
British Prime Minister Gordon Brown warned yesterday that there was no easy answer to the problem without coordinated global action.
'The global economy is facing the third great oil shock of recent decades,' he wrote in The Guardian newspaper.
'As every country faces increased costs, it is now understood that a global shock on this scale requires global solutions.'
He said the creation of a global strategy should top the economic agenda at July's G-8 summit in Japan.
Mr Brown met top oil executives in Scotland yesterday to push for greater output from Britain's North Sea oil fields and find out what government help they may need to do so.
A number of British newspapers also said yesterday that the government was preparing to water down its proposals on road tax and fuel duties in potentially the second U-turn on tax in as many months.
Asked about Mr Sarkozy's tax proposal, Mr Brown's spokesman said tax policy would remain a matter for Britain although oil prices would also be discussed at the upcoming EU summit.
Mr Sarkozy said in a radio interview on Tuesday: 'I want to ask the question to our European partners: if oil continues to increase, should we not suspend the VAT taxation on the price of oil?'
He said he could not take a unilateral decision to suspend or cap the fuel tax but added that France, which is scheduled to take over the EU presidency in July, would channel additional revenue from VAT on oil products into a fund to help those struggling with higher fuel prices.
But a European Commission spokesman has warned against tinkering with VAT on oil, as the French President had suggested.
'We would be saying that we can raise oil prices and this will be paid for by the taxes of Europeans. This would, in principle, be a very bad signal that we do not want to send,' the spokesman on energy issues said.
Austrian Finance Minister Wilhelm Molterer has also brushed off Mr Sarkozy's call for a cut in oil taxes.
'To be frank, I don't think much of the idea,' Mr Molterer told Austrian public radio, Oe1, yesterday.
'What will you do when prices fall again, reintroduce the tax? I'd like to hear the political discussions then.
'And then someone will have to say how we'd finance the shortfall in tax revenues.'
AGENCE FRANCE-PRESSE, REUTERS
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