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EU environment chief backs green tax plan: report

21/03/2008 - 14:55

BRUSSELS (Reuters) - The European Union's environment chief on Friday backed a Franco-British proposal to cut sales tax on green products to fight climate change, despite opposition from some countries and within the EU executive.

EU leaders this month asked the European Commission to study all fiscal tools that could be used to increase the use of environmentally friendly products, including lower rates of value-added tax (VAT), though some in Brussels were unconvinced.

"I support it. I think it's a good idea. I hope ... it will materialize," EU Environment Commissioner Stavros Dimas said in a BBC interview on Friday.

"It will be good for fighting climate change, and good for consumers to have the possibility to purchase environmentally friendly products at cheaper prices."

France and Britain argued the proposal could help the bloc meet its climate change goals and reduce energy consumption.

But Commission President Jose Manuel Barroso and EU Tax Commissioner Laszlo Kovacs played down prospects that the idea would get off the ground. British Prime Minister Gordon Brown and French President Nicolas Sarkozy acknowledged their plan faced stiff opposition from other member states.

The European Commission has the sole right to propose changes to the VAT system, and any alterations would require the approval of all 27 EU governments.

Brown and Sarkozy believe that lower value-added tax on environmentally friendly fridges, dishwashers, electronic goods, cleaning materials, light bulbs and insulation could spur people to buy products that use less energy.

"It could be a lowering of VAT or giving a subsidy for insulation, or an interest-free loan, to retrofit existing buildings," Dimas said.

EU leaders have pledged to slash greenhouse gas emissions by 20 percent by 2020 and increase the share of wind, solar, hydro and wave power and biofuels in their energy mix by the same date.

(Writing Darren Ennis; editing by Chris Johnson)

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