Green car tax plan hits problems

By Huw Jones

BRUSSELS (Reuters) - A European Union plan to tax cars on how much a vehicle pollutes is going nowhere fast after ministers questioned key elements of the proposal on Tuesday.

The European Commission wants to scrap registration taxes and replace them with a restructured registration and circulation tax linked to how much a car pollutes.

"It's not going very far, very fast. A colleague said ministers were discussing the same issue in 1991," an EU diplomat said after EU finance ministers touched on the plan.

"There was a broad exchange of views but ministers are not in a position to establish a clear political position on this subject."

The initiative from EU Tax Commissioner Laszlo Kovacs is part of the EU's strategy to cut carbon emissions to meet self-imposed targets and commitments under the Kyoto Protocol.

There was no backing for scrapping the registration tax to replace it with something else and some EU states questioned whether the proposal was the right way to cut emissions.

"There are many states which are fundamentally of the view that the vehicle tax is not something which should be dealt with on EU level, but rather in a national framework," Germany's Deputy Finance Minister, Thomas Mirow, told reporters.

The EU executive also wants to create a mechanism to refund double taxation -- when people move to another EU state and are forced to pay the local car tax again for the same period.