EU mulls Europe-wide carbon tax

French plans for a national carbon tax on transport and heating fuel could be adopted right across the EU under new emission reduction plans currently being considered in Brussels.

The proposal has been put forward by European taxation commissioner Laszlo Kovacs and is said to be gaining considerable support with France, the Nordic countries and Belgium already signalling that they will support the idea.

Kovacs said the aim of the tax was to change behaviour rather than raise revenue, and as a result any new tax should be offset by reductions in other levies such as income tax. He also advocated ring fencing the revenues raised " for climate change purposes and to finance the climate change efforts of the developing countries".

The EU does not have the power to interfere with domestic tax policies, but with the current EU emissions trading scheme only covering carbon-intensive firms, calls are growing for carbon pricing mechanisms to be extended into the wider economy.

A spokeswoman for the European Commission told The Times that while individual member states would have the final say on whether to introduce a carbon tax, it made sense to take an integrated approach designed " to avoid distortions within the internal market".

She also warned that without an EU-wide carbon tax, the EU might have to introduce some form of border tariffs to tackle the competition issues that would arise from the introduction of national carbon taxes.

Last month, the French President Nicolas Sarkozy announced plans to introduce a €17 a tonne carbon tax on transport and heating fuel as the centrepiece of a wide-ranging strategy to establish France as "the world leader of non-carbon energies".

However, Kovacs' proposals are likely to face staunch opposition from some member states, including the UK, who have long resisted attempts to level EU-wide taxes.

A spokesman for the Treasury said that the government had no plans to introduce a carbon tax. Moreover, the vocal motoring lobby would almost certainly oppose any attempt to level a carbon tax in addition to fuel duty even if it was offset by cuts in other taxes.