Poland cuts gas tax trying to ease consumer worries

Poland became the first European Union country to cut its excise tax on gasoline in response to high world oil prices.

The Polish Finance Ministry lowered the excise tax on gas by €0.06 per liter in a decision that took effect Thursday. The cut could lower the cost of gasoline at the pump to around €1.11 a liter.

Poland's decision comes despite last week's European Commission warning to member states against cutting fuel taxes in the wake of high oil costs.

But EU governments are struggling with growing discontent against rising oil prices, and many are considering ways of soothing the impact.

France announced a partial tax refund Tuesday for poor farmers reliant on fuel, and threatened oil companies with a windfall tax unless they kept prices lower.

The Hungarian government plans to cut tax on gas and fuel prices from the current 25 percent to 20 percent from Oct. 1, bringing forward relief that was supposed to take effect in January.

In Austria, the government reached an agreement with oil companies to cut gas prices €0.02-0.03 per liter. Vienna had threatened a special tax if the oil companies had refused.

In the past three weeks, Polish gasoline prices rose almost €.06 per liter, largely due to hurricane Katrina's impact on U.S. refining capabilities and the ensuing pressure on the world oil market, the AP reports.