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France, UK Propose VAT Cut on Green Goods
July 23, 2007
France, UK Propose VAT Cut on Green Goods
The UK and France have announced they will soon propose EU-wide reduced value-added tax (VAT) rates for greener products. At a press conference in Paris on July 20, French president Nicolas Sarkozy and British prime minister Gordon Brown said taxes should be lowered on products ranging from cars to white goods.
Mr Brown has already signalled his support for reduced VAT rates for environmentally-friendly products to EU tax commissioner László Kovács. The idea was also a central environment policy proposal in Mr Sarkozy's presidential campaign. Green products sold in France should be taxed at a reduced 5.5 per cent VAT rate instead of the standard 19.6 per cent, he said.
The idea has long been supported by the commission, notably in its efforts to introduce an EU integrated product policy . But it has traditionally been treated with scepticism by EU states, especially the UK. Mr Kovács floated the idea again in a communication published earlier this month . The commission says a preferential rate could be applied to products for energy efficiency and environmental purposes.
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