Sweden calls for more carbon taxes
By LOUISE NORDSTROM, Associated Press
Oct 2, 2009 8:51 AM CDT

Sweden urged other European nations on Friday to follow its lead in linking new taxes to greenhouse gas emissions as governments seek additional sources of income in the wake of the financial crisis.

Denmark, Finland and Slovenia already have taxes on household carbon emissions that can add costs to heating and electricity use. France is planning to plug part of its swelling budget gap with a new carbon tax that could bring in an extra euro1.5 billion next year.

Swedish Finance Minister Anders Borg, whose country currently holds the EU presidency, said Sweden's carbon tax "has been a very good source of revenue" since it was introduced in at the start of the 1990s.

It's a tax "where you can see a good purpose" because it encourages energy efficiency and renewable power, he told reporters after talks with European Union finance ministers in Goteborg.

The French tax also would hit gasoline or diesel fuel for cars. It's not popular: surveys show some two-thirds of people are against it, and businesses say it could make them less competitive than rivals elsewhere.

But the idea of taxing greenhouse emissions is gaining momentum as Europe aims to slash them by a fifth by 2020 by using less power and switching to renewable fuels that also would reduce reliance on foreign oil and gas imports.

The EU's top taxation official, Laszlo Kovacs, said he is ready to propose an EU-wide energy tax on fuel used for transportation and for household heating. That would add charges to fuel with higher carbon dioxide emissions such as coal.

He wants to update an existing tax based on energy content _ where oil is charged more by weight than natural gas. His reform would also see a levy charged on CO2 emissions. A minimum rate would be set for all EU nations that allows governments to charge more if they want.

"It would certainly give renewable energies some tax and price advantage," Kovacs told The Associated Press.

He said no EU government spoke out against such a tax during Friday's meeting _ although he said he was aware that any proposal would need the unanimous approval from all EU states before it could go into effect.

Total agreement by the 27 nations on the sensitive subject of tax is rare.

Europe has largely shied away from environment taxes so far, opting instead for cap-and-trade programs to curb emissions from heavy industry and power generation.

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Associated Press writers Barbara Schaeder and Aoife White contributed to this story.