German coalition says to link car tax to CO2 output

BERLIN (Reuters) - Germany's ruling coalition has agreed to link car tax to carbon dioxide emissions from 2010, senior members of Chancellor Angela Merkel's conservatives and their Social Democrats (SPD) partners said on Wednesday.

Older cars should for "several years" be exempted from the change in the tax, which has so far been levied in accordance with cylinder capacity, the two sides agreed.

In addition, new cars that produce fewer emissions should be granted tax concessions, SPD parliamentary floor leader Peter Struck, and Guenther Oettinger, conservative state premier of Baden-Wuerttemberg, told reporters in Berlin.

In future, car tax revenues should accrue to the federal government, for which Germany's 16 states would be compensated, they added. It was not yet clear how this would ensue.

Leaders from Germany's ruling coalition were meeting on Wednesday evening to discuss a range of reform measures ranging from proposals to introduce a minimum wage and whether to cut payroll taxes that fund state unemployment insurance.

(Reporting by Andreas Moeser, writing by Dave Graham)