UK and France to propose EU-wide tax cuts for greener products
Fri 20 July 2007
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Gordon Brown and the new French President, Nicolas Sarkozy, have announced that the UK and France will be proposing EU-wide reduced value-added tax (VAT) rates for greener products to help tackle climate change. The leaders said that taxes should be lowered on products ranging from cars to white goods.
ENDS reports that the UK Prime Minister has already signalled his support for reduced VAT rates for environmentally-friendly products to EU tax commissioner László Kovács. The idea was also a central environment policy proposal in Mr Sarkozy's presidential campaign. Greener products sold in France should be taxed at a reduced 5.5 per cent VAT rate instead of the standard 19.6 per cent, he said.
The idea has support from the European Commission, but it has been treated with scepticism by EU states in the past, especially the UK.
Some tax experts, however, warn that any such scheme could face practical difficulties and could lead to trade discrimination against less-developed countries.
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