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Changes
to VAT must come in the form of a proposal from the
European Commission that is adopted unanimously by EU
states.
"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 labour-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.
Source
: Guardian Unlimited - UK, dated 21/01/2008
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