France and Britain will propose a reduced rate value added tax (VAT) on green goods, the European Commission said on Friday.
“Discussions haven’t started yet on a political level. It’s going to start during this next [finance ministers meeting] on the 13th of November,” a spokeswoman for the EU’s executive Commission told a regular briefing.
“The French minister of finance and the minister of finance of the UK I think together are going to make a proposal … on reduced VAT rates for most energy-efficient goods,” she said.
“It is, after all, abnormal that a polluting car costs less than a car that does not pollute,” said French President Sarkozy.
Brown said lower VAT on green products “could send out a very important message about what we think about pollution and about what we can do.”
He said the tax cut could cover “fridges to insulation, for all the major goods that may pollute but actually, by being produced in a way that is environmentally friendly, can actually benefit the environment.”
It is unlikely all 27 member states of the E.U. will agree to the change. Germany has yet to respond to the announcement, foreshadowing a possible veto.
Germany has long opposed VAT exemptions.
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