The European Union should consider ways to support the development of environmentally-friendly products by reducing the level of VAT on them, EU leaders agreed Friday, according to dpa. The proposal, first made by British Prime Minister Gordon Brown, "will start the debate in many member states about how and whether household goods ... can incentivize consumer behaviour towards buying energy-efficient and environmentally friendly goods and services," Brown said. "I believe that we could re-establish the extra cost of clean products by a lower tax level. These clean products should benefit from a lower level of VAT," French President Nicolas Sarkozy agreed. Under the decision, the EU's executive body, the European Commission, is tasked with "reflecting" on "the best way to support the development of clean products by evoking the question of environmental VAT," Sarkozy said. But the proposal is unlikely to lead to concrete measures soon. VAT is a sensitive issue, since much of the EU's common budget comes from the VAT which consumers pay in each member state, and any decisions on changing rates have to be approved unanimously. "People are being persuaded by the argument that we should look at this very carefully. VAT is a uniquely European tax. ... (We made) substantial progress in only two days and I believe that over the next few months other countries will join the debate," Brown said. Despite the support of Britain and France - two of the EU's three largest states - some member states oppose the proposal and could well block it.
