BRUSSELS (Reuters) - There will be no proposal from the European Commission to cut sales tax on energy-efficient products as a way to help combat climate change despite French and British calls, a source at the EU executive said on Monday.
By Huw Jones
BRUSSELS (Reuters) - There will be no proposal from the European Commission to cut sales tax on energy-efficient products as a way to help combat climate change despite French and British calls, a source at the EU executive said on Monday.
France and Britain put forward the idea of reduced value-added tax (VAT) on green products in a letter to EU finance ministers last year.
Changes to VAT must come in the form of a proposal from the European Commission that is adopted unanimously by EU states.
!ADVERTISEMENT!"We don't have a convincing impact assessment on this," a senior Commission source involved in the dossier said.
It was difficult to assess the wider environmental impact of cutting VAT on some goods, he said.
For example, a push bike is a green form of transport but is made of steel, whose production affects the environment.
"We are simply not in a position to put on the table a proposal on environmental products," the source added.
"It has been asked for politically, but that in itself is not sufficient. You can't take the risk of launching this without knowing the consequences," the source said.
A Commission proposal to tax cars on how much a vehicle pollutes has made little progress, the source noted.
The EU executive will, however, propose by the year-end changing the composition of excise duties on energy to include an element related to carbon dioxide emissions.
A mechanism will be included that allows companies to offset the carbon element of the duty against carbon taxes paid elsewhere in a bid to win EU state support for the reform.
The European Commission is also working on a "once and for all" proposal to streamline the current patchwork of reduced VAT rates, such as on labor-intensive services like hairdressing, and locally based services.
A study by Copenhagen Economics, an independent consultancy, showed a "clear and convincing" case for reduced rates in some services and there would be a formal proposal for EU states later this year.
"We want to give flexibility to EU states beyond what exists today," the source said.
The Commission will propose for example that France apply reduced rates of VAT on restaurant meals, as some EU states already do, though there was no guarantee of unanimity for such a step, the source said.
The reduced rates dossier was set for a bumpy ride.
"Even if we come up with an excellent proposal, we cannot expect the council (of EU states) to adopt it at first reading," the source said.
(Editing by Dale Hudson)
