EU to use taxation to protect the environment

By Huw Jones

BRUSSELS (Reuters) - The European Commission will soon come up with ideas for "green taxes" to save energy and cut greenhouse gas emissions, officials said on Monday.

EU political leaders agreed this month to set targets to reduce emissions and increase the use of renewable energy and taxation will be a key tool to reach these objectives, EU Tax Commissioner Laszlo Kovacs told a conference.

"I would like to use a Green Paper to launch possible ways forward on energy taxes at EU level," Kovacs said.

Taxes can steer the bloc's 500 million consumers toward a more efficient use of resources with the revenues recycled back into the economy, he said.

Taxation at the EU level is just as electorally unpopular as at the national level but need unanimity among the bloc's 27 members.

But the newly agreed deal by states to cut emissions and people's willingness to help the environment mean these barriers were no longer insurmountable, Kovacs said.

"The taxes that people are most inclined to pay are environmental taxes because they do understand that what is at stake is the future of mankind," Kovacs said.

Kovacs and EU Environment Commissioner Stavros Dimas will publish ideas on how taxes can be used to cut emissions.

"Market-based instruments are the most direct and simplest way to make the polluter pay," Dimas said, adding "There is a logic for action at EU level."

The Commission has already made a start.

Kovacs wants to raise the minimum duty on commercial diesel fuel, partly to stop trucks from adding to pollution by taking detours to a neighboring country where fuel is cheaper.

If all states adopted similar green taxes, there would be no loss of competitiveness between EU states, Dimas said.

Water pricing, sustainable waste management, the reduction of local air pollution and habitat banking were all areas where an EU tax could play a role, Dimas added. reporters on the sidelines of the conference.

Germany currently holds the six month rotating EU presidency and its Finance Minister Peer Steinbrueck said taxes could give incentives for environmentally friendly activities and punish polluters, particularly in transport which accounts for nearly a fifth of the bloc's carbon dioxide emissions.

"The Commission needs to look at tax issues over the whole of the EU," Steinbrueck said, adding that the bloc needed to move faster on harmonizing energy taxes.

Business has said that higher taxes could dent the European economy's ability to compete.

"We think it's possible to create jobs and protect the environment," Steinbrueck said.