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Environment

Green car tax plan hits problems

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.

Cars drive along a road in central Brussels March 8, 2007. 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. REUTERS/Yves Herman

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.

Some states are unsure about a refund mechanism until they know the technical details of how it could work.

“All three elements of the Commission’s proposal are seemingly in difficulty,” the diplomat said.

EU states have sole say on tax matters and unanimity among all 27 bloc members is needed for a deal to go through. The problems faced by the plan highlight the difficulty EU states face in translating pollution targets into practice.

Commission officials privately complain that EU states court positive headlines by talking tough on emissions but baulk when it comes to deciding the details of meeting self-imposed targets.

Additional reporting by Dave Graham; Editing by Robert Woodward

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