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EU should use tax policy to improve environment, Kovács says

The European Union should use taxes to discourage pollution as part of the region's fight against global warming, Taxation Commissioner László Kovács said.

„Taxation can be used as a very traditional but also effective instrument to have an impact on the economy, to have an impact on the players in the market,” Kovács said in an interview in Brussels today. The tax policy fits with a commitment to curb the use of fossil fuels and reduce emissions of greenhouse gases, pledged by leaders of the 27-nation EU at a March 9 summit meeting. The European Commission, the EU's executive agency, has proposed boosting taxes on truck diesel in some countries and linking car taxes to how much the vehicles emit. Kovács, who in November urged a shift of tax burdens away from labor onto emissions, will explore further steps in a conference opening today and a policy paper due March 28.  „If we tax polluting technologies, if we tax polluting resources, then we can certainly change the proportion of environment-friendly” activity in business, said Kovács, a Hungarian former diplomat who started a five-year term as EU tax and customs commissioner in November 2004.

Environmental policies can also create jobs, he said, such as favoring renewable energy sources to help make European companies the world leaders in new clean-fuel technologies. Kovács has limited power to impose his will on national tax laws. EU tax proposals become law only by unanimous agreement, a hurdle that has held back initiatives such as harmonizing the way corporations compute their income for taxes in each country. (Bloomberg)